Twitter creator Jack Dorsey Wednesday gave the first public demonstration of his hotly-anticipated latest venture -- a device to allow credit card payments by cell phone -- and revealed it would be given away for free.
Although the details are fairly vague it seems like a pretty cool invention. You can read the full article here. I have been waiting for something like this to hit the broad market. In fact I have been waiting since college when in an innovations class a guy and I tried to develop a credit card phone prototype. It seems pretty naive now to think that even if we developed a prototype we would have had the power and influence to bring it to market, but at the time we were pretty into it. We found a computer science guy who specialized in hardware stuff and asked him to start building a magnetic strip reader into a phone. Our innovations teacher told us to hook up with a comp sci teacher who had experience bringing a company to market within the handheld device arena. Our excitement was short lived as we found out that the comp sci instructor at the USAF Academy actually held the patent for magnetic reading devices within a handheld device. He had sold that patent along with his company to a larger company who he said probably didn’t even realize they had that patent.
Details of "Square" -- a card reader which plugs into the headphone socket of most mobile devices -- have been circulating on the Internet since it was announced earlier this month, but little has been known about how it works or who it was aimed at.
However, Dorsey -- whose microblogging Web site has proved hugely popular but not hugely profitable since launching in March 2006 -- gave no explanation on how he would make money from his new creation, beyond revealing there would be a per-transaction charity donation.
Square, a tiny cube about an inch in length, contains a magnetic strip reader that allows users to swipe and read credit cards, then deduct payment on or offline through a downloaded application that communicates with card issuers in the same way as retailer devices.
Customers then use their finger on the phone's touch-recognition screen to sign their name to the transaction.
It sounds like the Twitter creator's venture bypasses the conventional thinking of putting the reader in the phone all together by making the reader a separate attachment that works through the headphone jack. Regardless, this is something that needs to happen. I hate using cash and rarely carry it, but there are still obvious needs for cash. An invention like this one would likely eliminate many of those needs to carry cash in my opinion.
"The financial world is amazing right now because there's a clean slate. A lot of these industries are looking for something very small and innovative," he said during the gremlin-hit demonstration of his device at LeWeb, a major Internet forum in Paris.
"My co-founder is a glass artist. He sells things that people don't need -- $2,000 glass faucets. They're beautiful. If he could not take credit cards, he wouldn't make the sale because no one carries around $2,000 in the cash.
"So we looked at it. Ninety percent of the U.S. has moved to credit cards, but it's still very difficult to accept them."
"We're trying with a bunch of different profiles of folks in New York, San Francisco, LA and St. Louis, Missouri. There are piano teachers, flight instructors, and coffee shops. It can be used in a retail store like Apple, all the way down to Craigslist or paying me back for that dinner you owe me."