Jack Dorsey, Founder of Twitter and Square
Twitter has changed how people communicate. Dorsey's new project Square will transform how you pay for everything.
You have probably heard of 34-year-old Jack Dorsey as a founder of Twitter, the revolutionary social micro-blogging platform, on which 200 million members broadcast 140-characters-or-fewer messages in real time. His work on that site alone qualifies him for our list of successful, innovative creators. But Slate has even higher hopes for his new project: Square.
The idea is simple enough: Square produces a little chip that plugs into smart phones and turns them into credit or debit card readers. Users can then accept payments for anything from a cup of lemonade to a space shuttle, were one for sale. The Square system, available for free for Apple and Android mobile devices, also works without the chip. Customers just need to type their payment information in.
The product is aimed at small businesses, half of which do not accept credit cards because of the hassle and cost of working with the major payments-network providers. Indeed, Dorsey thought of the cool little tool when a friend of his, an artisanal glass blower, no less, complained about losing out on business because he could not accept cards. But anyone can use it, for personal or commercial purposes.
It sounds cool enough, sure, but is it really revolutionary? Perhaps "disruptive" is a better word. Credit and debit cards might be easy and free for customers to use. But they are a pain for businesses, particularly small businesses, to accept. Square promises to make it painless.
Right now, businesses pay fees worth 1 percent or 2 percent or 4 percent of each transaction to their payments processors. It adds up—and, worse, the pricing is frustratingly opaque. Networks charge different fees for different cards at different times, meaning small businesses are never sure just how big of a cut the credit-card machine is taking.
Enter Square. Its fees are not cheap: It takes 2.75 percent of the cost of a transaction if a card is swiped, and 3.5 percent plus 15 cents if it is input manually. But those fees are set in stone, and they are cheaper than many.
The company, up and running for about eight months, is winning big fans. It has shipped more than 300,000 card readers, processed tens of millions of dollars in payments, and attracted venture capital from some of Silicon Valley's most prominent investors. As for Dorsey himself? He's focused on the new business, and thinking of others, when not busy quizzing Barack Obama.
Annie Lowrey, formerly Slate’s Moneybox columnist, is economic policy reporter for the New York Times.
Photo of Jack Dorsey, founder of Twitter and Square, by MANDEL NGAN/AFP/Getty Images.