The mobile payments market is about to get interesting. Square, the company that allows virtually anyone with a smartphone to accept credit card payments, has unveiled a new card reader that will work with the chip-embedded cards that are commonplace across Europe and that will finally be coming to US consumers’ wallets in 2015.
However, this insistence for persevering with 20th century cards with a static magnetic strip that is easy to clone (and the reason why most of the world’s credit card fraud occurs in the US), is also the reason why Square and a handful of competitors have been able to enter the market and start shaking things up. Making a dongle that plugs into a smartphone and reads a magnetic strip is comparatively simple.
And while creating a similar device that holds a card and reads its embedded chip while simultaneously validating a four-digit PIN number is more complex, the fact that Square is getting ready to launch such a reader could be good news for consumers and small business in every other major economy around the world.
That’s because, subject to approval, the Square chip card reader would work equally well in the UK or France as it would in the US. Therefore Square’s announcement could signal that an international expansion is on the cards. As well as a card reader, Square also offers a wallet smartphone app that enables consumers to make payments without any form of physical card at a host of establishments that support the Square reader. For example, at Starbucks, consumers can not only pay for their chai tea latte with their phone, they can also use the app to tip their favorite barista.
Every year, experts predict that it will be the year of mobile payments and every year the technology fails to catch the public’s attention. However, 2014 could be the year when these predictions start panning out. As well as Square and PayPal that already offer plug-in card readers and apps, Amazon is getting ready to launch a credit card reader of its own, expected to go on sale in August.
Apple is also tipped to unveil some form of mobile wallet app before the end of the year which will be linked to an iPhone user’s iTunes account and supporting credit card for using a handset for making payments.