The kid mowing your lawn now accepts American Express.
This simple gadget, called Square, is the micro-merchant’s dream.
Most of us would consider retirement after, oh I don’t know, say, inventing Twitter.
Not Jack Dorsey. Dorsey was the guy whose idea that launched a thousand tweets. But after two years as Twitter’s CEO, Dorsey left the company and went looking for the next big thing.
Dorsey teamed up with his friend Jim McKelvey, who had actually given Dorsey his first internship when the young inventor was only 15.
One day, McKelvey, who runs a glassblowing studio on the side, found himself losing a big sale because he couldn’t accept American Express. He called up Dorsey to complain. Maybe it was something about talking on the phone with the inventor of Twitter… But no sooner had he finished telling the story than he had the idea for their new company.
In 2010, they launched Square: a secure and easy way for anyone to accept credit card payments with their iPhone.
Here’s how it works. You sign up with Square, and download their free app. Then they send you a free accessory.
It’s a little white square that plugs into the headphone jack of your smart phone. And woila- you can now process credit card payments right on your iPhone.
The customer signs for the purchase with their finger. And their receipt is emailed or texted to them.
And the money is deposited into your checking account.
Square takes 2.75% of every transaction. Not a bad deal when you consider the software and hardware are both free.
Square hopes to put the power of plastic in the hands of the people. As Dorsey points out, 90% of people carry cards, but almost no one can accept them.
Imitation is the highest form of flattery. And Square is being flattered left and right. Everyone from Intuit to Paypal has gotten in the game, all offering their own smartphone card swipers.
But Square is already looking for the next big thing in payment processing. Like their new service that allows you to pay for goods using only your voice.
Jim McKelvey and Jack Dorsey exemplify one of our Axioms for Entrepreneurs:
Solve a Problem Within Your Profession.