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Credit and Debit Cards: The Smartphone Easy-Payment Process

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Square gets its name from both the shape of the card-reader device and from the common question, “Are we square?” used when money changes hands.

Credit and Debit Cards: The Smartphone Easy-Payment Process

by Stephen Blake Mettee

Early on at Quill Driver Books, we discovered that an author who could take credit cards would sell three times as many books as one who was stuck accepting only checks and cash. Today, with seemingly everyone using debit cards, the advantage applies to an even greater degree.

What we used to do when one of our authors was speaking to a large group or putting up a table at a book fair or similar event was pack up one of those machines that takes a credit card imprint and the multipart forms the machine used and send all that off to the author. We also sent instructions on how to use the machine and a request to please have the buyers write their phone numbers on the form.

After the event, the author would return everything to us, including the completed forms. We would run the charges, credit the author’s account with the revenue, and write the author a check.

Often things went wrong. The card either didn’t imprint legibly or was rejected by the bank, or the customer forgot having bought the books and challenged the charge through the bank when the bill came. Those were invariably the charges for which the author had failed to get the buyer to write down a phone number.

But we continued to do this for years because (1) we wanted to sell books; and (2) for many authors, the income from sales of their books at events was an incentive to attend (we give authors a 40 to 50 percent discount and pay regular royalties on books they buy). An author who sold 50 books would reap something like $450. Okay pay for a three- to four-hour gig that also promoted the author’s book.

Eventually—maybe because it just got to be too much of a hassle—we drifted away from this practice. Both Quill Driver Books and our authors are the poorer as a result. We do continue to accept payment by credit card for phone, Internet, and mail orders, but I know many smaller independent publishers who have decided to forgo accepting credit cards because of the attendant hassles and costs of opening and maintaining a merchant services account.

Enter technology.

A New Solution

Now, thanks to a new company named Square (squareup.com), anyone with a smartphone or other mobile device—author, publisher, even someone holding a weekend garage sale—can accept debit and credit cards.

No merchant account required. No upfront fees. No monthly fees.

Square is the brainchild of Jack Dorsey, co-founder and chairman of Twitter, a company you may be familiar with. Dorsey’s forte seems to be minimalism. Spend a few minutes signing up for Twitter, and you’ll be able to tweet 140-character messages immediately. Spend a few minutes signing up for Square, and you’ll be able to accept debit or credit card payments immediately. A reader device used to swipe credit cards will be sent to you free of charge, but it isn’t needed to accept payments.

Here’s what you need to do:

Download the app to your mobile device. Supported devices include the iPhone, iPad, iPod Touch, and Google Android devices. As of this writing, Windows-based mobile devices aren’t supported. Your device must have an Internet connection—Wi-Fi, 3G, 4G, or Edge—to authorize each payment, but unless you’re hiking the Alaskan woods with Sarah Palin, that shouldn’t be a problem.

Create a Square account in the Square app. This involves supplying your name and other basic information.

Apply to accept payment cards. Here you will need to supply your Social Security number (you can also enter your business’s EIN, but a principal’s SSN is required) and answer a few questions that will verify you are who you say you are.

If you have the routing information and number of the bank account to which you want automatic deposits to be made, you can enter that information at the same time, or visit the Square site and enter it later. Square will hold on to your funds until you do.

From downloading the free app from the iTunes App Store to putting a $1 charge on my own credit card took eight minutes. Each individual transaction will normally take only a minute or two.

The small square reader, from which the company gets its name, plugs into the headphone jack on your mobile device. You simply swipe a card through a slot in the reader. This is simpler than keyboarding the information, and it secures a lower transaction processing fee for you.

The customer signs for the purchase with a finger on the mobile device screen. A receipt that includes the image of the signature as well as a Google map that shows the location of the transaction can be automatically sent to the customer’s email address as well as to yours.

You can view each transaction individually and see your company’s transaction history online at Square’s site. And you can download the history as a CVS file for importing into Excel or other software.

Anticipating Your Questions

Square works with any United States–issued credit, debit, prepaid, or gift card with a Visa, MasterCard, American Express, or Discover logo, except those issued for health saving accounts.

There are no initial, recurring, or hidden fees. Processing fees for swiped transactions are 2.75 percent plus 15 cents. For keyboarded transactions, fees are 3.5 percent plus 15 cents. Competitive merchant services might charge processing fees from 1.5 percent to 2 percent plus 25 cents per transaction, and might have additional fees such as a monthly charge.

The Square charge or debit to your customer’s card is authorized or denied just as at any retailer’s. If the card is invalid or over the limit, the transaction won’t go through.

There are no limits on transaction size or number of transactions.

The whole system is private and secure. Information sent over the Internet is encrypted. No customer information is stored on your mobile device or available to you on your Square account.

Funds are automatically deposited to your bank account after 24 hours.

Refunds can be made for 60 days following a transaction by visiting the payments page of your Square account, selecting the transaction, and clicking on “Refund this payment.”

Up to 10 mobile devices can be active concurrently on one account. This would come in handy at a large trade show where you have a number of people making sales. While we all trust our employees, it might be wise to ask each salesperson to let you enter the Square password when downloading the app, or to change the Square password at the end of each day, since online access to your company’s Square account uses the same password. For this reason, ask your authors to get their own Square accounts.

There are other options. If you already use a merchant account and prefer to keep using it to capture lower processing fees, or to have all your credit and debit card transactions appear in one account, your alternatives to Square include using Intuit (intuit.com), Merchant Warehouse (merchantwarehouse.com), Simply Swipe It (simplyswipeit.com), iSwipe (appninjas.com/swipe), Roam Data (roamdata.com), and PAYwareMobile (paywaremobile.com). Features, costs, supported mobile devices, the price of swiping equipment, and ease of use differ, so shop around. You might check with your current merchant services provider to see if it has a preference.

A Final Thought

With the irritating cacophony of e-books, e-readers, digital formats, and digital distribution systems assailing publishers today, maybe we should ask Jack Dorsey to step in and make it all simple.

Stephen Blake Mettee serves on the board of IBPA and is the founder of Quill Driver Books and The Write Thought. He sporadically blogs at TheWriteThought.com/blog.

YouTube Videos to Watch

i-phone I-SQUARE (youtube.com/watch?v=RNp8ktXRGio)

Accept Credit Cards on your iPhone [iSwipe] (youtube.com/watch?v=7JLONgQOzeU)

ROAMpay iPhone 4 Credit Card Swipe Demo (youtube.com/watch?v=LD_cSDngBXo)

Brand of the Free takes mobile payments w/ PAYware Mobile for iPhone (youtube.com/watch?v=NXBeIocLIf8)

Web Sites to Visit

intuit.com (Intuit)

squaredup.com (Square)

merchantwarehouse.com (Merchant Warehouse)

simplyswipeit.com (Simply Swipe It)

appninjas.com/swipe (iSwipe)

roamdata.com (Roam Data)

paywaremobile.com (PAYware Mobile)



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