Accepting Credit Card payments by iPhone?

November 13, 2010 5:32 PM

What (if anything) should I be aware of or concerned about with accepting credit card payments via iPhone?

I read about this in this weeks Time Magazine. It seems like exactly the solution I've been looking for, but I've never dealt with accepting credit cards by any means so I'd appreciate some general advice as well as any thoughts or opinions on this specific method.

posted by blaneyphoto to technology (12 answers total)

Square charges incredibly high rates. If you are doing any sort of volume, make sure you understand interchange rates and insist upon a very low fee and passthru rates.
posted by mmdei at 5:38 PM on November 13, 2010

I suspected that the rates were high, but in my case its not a huge deal. 99.99% of my clients are happy to pay with cash or check, but just recently I had two occasions where the client would've purchased more had they been able to use a credit card... so although it won't get used very often, it would be nice to say "Yes, I can accept credit cards!" when I must.
posted by blaneyphoto at 5:50 PM on November 13, 2010

Be sure that whatever application you uses encryption. Alternatively, if you're going to be out and about and using someone else's network/access point, you should probably VPNing anyhow.
posted by Brian Puccio at 7:44 PM on November 13, 2010

You can probably rest assured that Square takes care of encrypting the traffic between the iPhone and Square.

The first thing that occurred to me with those, though, and what might occur to your credit-card clients: "Wait, you want to just scan my card into your phone?" It doesn't look like a credit-card terminal and people might get suspicious about skimming.
posted by mendel at 7:49 PM on November 13, 2010

You're going to look really, really unprofessional. I wouldn't feel comfortable swiping my credit card on the same device that my waiter uses for sexting and listening to Devendra Banhart.
posted by halogen at 7:54 PM on November 13, 2010 [1 favorite]

Depending on your industry, I can see some people being weird about you scanning their credit cards into your phone. Do you know these people? I personally think an iPad would be a more professional setup (square is available for iPad).

You could make this slightly more professional looking by setting up a permanent system and using a 1/8" extension cable and mounting the square connector on a sales desk.

Then again, Apple uses a similar system, so perhaps these concerns are unwarranted.

To answer your question, Square is a very serious business and I'd trust my payments with them.
posted by jz at 8:55 PM on November 13, 2010

The 1/8" extension cable thing is a good idea but probably wouldn't work without a special cable; the Square reader uses the four-band cable that the iPhone headphones with mics use, and most extension cables are designed for the more traditional three-band 1/8" headphone jacks.

I've used Square and I found their interface to be very easy to use, and everything seemed quite secure and professional. In my limited experiments with it in my personal life no one has

The fees were a little tricky to estimate at first, and the app doesn't display what they are when you're accepting a payment, only afterward when you receive the payment into your account. If you don't want to do a bunch of percentages in your head, it works out to just over $0.50 per $20.00 you charge.

If you're doing a lot of transactions of this type, particularly small transactions, the fees can add up, and you may want to find a way to incorporate them into your pricing. I believe cardholder agreements prohibit you from charging customers a fee to accept credit cards (though I'm not sure that's also the case with Square, as it's actually Square who has the agreement with the card companies) but generally they do allow you to offer a discount for cash transactions.

My $0.02.
posted by raygan at 10:03 PM on November 13, 2010

*should have read "In my limited experiments with it in my personal life no one has been concerned about it. Everyone has just said "Neat! You can take credit cards on your phone?""
posted by raygan at 10:05 PM on November 13, 2010

It's a bit unfair to call Square's processing fees "incredibly high". I did a bit of casual surfing and the cheapest transaction fee for in-store retail (which is cheaper than Internet or mail-order fees) I could find was 1.69% plus $0.20 per transaction; I found one place with higher transaction fees than Square's. And Square has no charge for the mobile terminal.

Most merchant accounts pile on a bunch of other fees, like a statement fee, and have a minimum monthly transaction charge of about $20. Using raygan's rule of thumb, you'd need to do $800/mo to reach that level. And IIRC, it can be difficult to qualify for a merchant account at all.
posted by adamrice at 9:04 AM on November 14, 2010

I've helped a friend out at craft fairs recently and she has square. During the two day fair I worked we probably did 25 credit card transactions and (like raygan's experience) the people who did mention it thought it was cool. A couple commented that they wished more people at the fair had that capability as well.

We did have one person who thought it was sketchy but even she ended up paying with a card anyway.

She loves it but her items cost a bit more so it is more out of the range that most people have cash on hand for. I've thought about doing it a couple of times for the things I sell but my price point is so low that I haven't wanted to bother. I rarely lose a sale because the person doesn't have enough cash.
posted by magnetsphere at 12:06 PM on November 14, 2010

My impression is also that Square's fees are quite low, considering the easy access they provide.

I might be a little skeptical of seeing Square used in a storefront, but at craft fairs, for sole practitioners, charity events, auctions etc I think it's a fantastic step forward. Give it a little time and it won't even look weird in a normal retail setting.
posted by alms at 4:47 PM on November 14, 2010

Thanks for all the replies - its very useful to get a range of opinions on this!

As for whether it looks odd or unprofessional, I'm not very concerned about that being an issue at all. I do not operate a storefront business or have any walk-in clients. As a photographer, I spend weeks and occasionally months working out the details of a shoot with a new client, so by the time they've decided to work with me they're probably already assured of my professionalism. If they aren't its doubtful they'd continue to negotiate the shoot. Honestly, I've felt less professional saying "Yeah.... I only take cash. I don't trust your personal checks, etc"
posted by blaneyphoto at 5:00 PM on November 14, 2010