Square's Jack Dorsey Wants to Replace Everything, From the Receipt to the Register

From the San Francisco Chronicle offices where some of the newspaper’s local ad sales used to be, we caught up with Jack Dorsey, co-founder of Twitter and CEO of Square, which is working on ways to accept credit card payments using a mobile phone.

Within a few minutes, I’d paid Square’s COO Keith Rabois $2 after he swiped my credit card through a small plastic dongle attached to his iPhone. I signed the screen with the tip of my finger and received a receipt by email to confirm the purchase.

(They did not repeat this transaction more than 10 million times to recently raise $27.5 million, they promised).

For small-business owners, like an artist at a farmer’s market or even a family at a Saturday morning yard sale, this could make the difference in closing a sale, especially as our society moves away from cash and more to plastic.

Rabois says 50,000 to 60,000 new users are signing up a month, and Square is processing millions of dollars a week.

It is also convenience–at a price.

Square charges 2.75 percent plus 15 cents for swiped transactions, and slightly more if you type in a credit card number. For $100, that translates to a $2.90 service charge.

The model doesn’t replace the need for Visa and MasterCard, but does compete head-on with services being built by those financial incumbents, as well as others like Intuit, PayPal and the wireless carriers.

On the merchant side, it’s easy, too. Download the app to either an iPhone, iPad or Android device, create an account and receive a Square accessory in the mail. On the user side, your card will be swiped by a small proprietary reader, and you will be emailed a receipt.

Dorsey, who slowed down long enough to talk to us for a few minutes, is the visionary behind the operation, which sees way more applications for what it is building–from redefining the receipt to getting rid of the register.

EMoney: Last month, Square raised $27.5 million in fresh capital. What’s the plan for 2011?

Dorsey: The plan includes growing the team, both in engineering and design, and increasing the awareness of Square, which means expanding the user base to the plumber, the piano teacher and the dog walker. As for product innovation, we will do a lot with the receipt. “Let’s make it interactive instead of something we throw away.”

How can the receipt experience improve?

Dorsey: Making payments “has never been treated as a product. It’s a burden, and yet it’s such a common human activity.” At the heart of it, the receipt process is a publishing platform, he said. “We can dramatically improve what you take away.” Currently, a Square receipt includes a picture of the merchant, a description of what you purchased, the amount and a map of where you bought it. When buying a cup of coffee, why not include information about the coffee beans, and link to an article in Wikipedia? A more advanced version would eliminate the need to carry around 20 coffee cards and be intelligent enough to give you a 10th cup free.

Do you think you can replace the register?

Dorsey: “Yes. They are terrible.”


Dorsey: “It’s a pain, and it takes forever.” Long lines are created in cafés, and waiters must come back with the check. “We aren’t just accepting credit cards–we are simplifying the friction from the payment system. No one has done this.” Square is looking at making an all-in-one payment and point-of-sale device that could be as simple as an iPad. And, with one swipe of the card, a patron could broadcast his or her location on Twitter and receive loyalty points.

What about innovation on the merchant side?

Dorsey: “There’s a lot of attention on the payers, but not the merchants….Every Silicon Valley company has a dashboard–it’s called Google Analytics–but a lot of small- to medium-size businesses have no access to data at all.” A point-of-sale system could cost $15,000, and still it would not track how many lattes were sold vs. blueberry muffins. But what if a system could be built that could track this and show whether to draw correlations between the two? “Data simplifies everything,” he said.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik