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June 27, 2012

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D Mcgee

Good piece Chris.

Square is a really interesting company and I think Jack Dorsey is not only brilliant and talented but also is achieving (or has achieved) the kind of cult status in the tech world that anything he does will be followed closely. In this case he and his team have really delivered a user experience that backs up that reputation.

My one issue with this whole thread, is that its really innovation for specific type of small merchants, which is a pretty small demographic. People are thinking this is really changing payments, but who was asking for the innovation? Where were the pain points? Major retailers don't have a problem with credit cards. Credit card companies are happy in the old world and new world. And users themselves don't care, in fact, its really hard to get users to pay in ways other than credit cards these days, so they didn't have any problem with efficiency or cost or anything else with the former credit card payments experience. So where is the real innovation? Even paying with your name rather than a card, is that really a big deal to any customer? Is it really a big pain point to take a card out of your pocket? Or to swipe your phone? Or to have to make any type of gesture or physical action?

There is a lot of talk about changing the payments industry, but I don't think there is much innovation going on here at all. In truth, the real innovation would be undercutting the credit card payment and interchange rates, and its hard to see that happening when Visa is an investor in Square.

Even merchants would much prefer innovation on the interchange rates (especially those with razor thin margins in which credit card companies make as much or more money than they do on their business), rather than any supposed innovation in the payment experience.

Perhaps "the Apple of finance" is a bit premature.

Makarand Jadhav

Chris,

Thanks... real good article on payments innovation.

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