Twitter cofounder looks to strike gold again with Square

Posted Dec 2nd 2009 3:20PM by Tom Taulli
Filed under: Next Big Thing, Small Business

Even during a tough recession, payment companies -- like Visa (V), MasterCard (MA) and eBay's (EBAY) PayPal -- have continued to thrive. So it should be no surprise that other companies want a piece of the action.

And one of the newest players is Square. In fact, the mastermind of this new venture is also the cofounder of the wildly successful Twitter (which recently raised capital at a $1 billion valuation).

Simply put, Square allows you to accept credit cards by using a gadget -- which is essentially a magnetic card reader -- that connects to a mobile device, such as Apple's (AAPL) iPhone. Apparently, the fees will be much lower than traditional alternatives. There's even talk that Square will give away the devices.

What's more, Square is fairly easy to use and setup is supposed to take less than 60 seconds. There are also some nifty features, like SMS receipts.

For small business owners, the credit card process can be a big pain, in terms of ongoing expenses and maintenance. In other words, if Square has a much better mousetrap, the business could certainly be huge. For example, the company sees a massive opportunity in facilitating transactions across Craigslist.

However, the payments industry can be a minefield. One of the big concerns is fraud. Also, it's important for the system to have uninterrupted up-time. Hopefully, Square is much more successful at this than, say, Twitter has been.

Tom Taulli is the author of various books, including The Complete M&A Handbook.

Tags: ebay, inthenews, Jack Dorsey, JackDorsey, ma, Square, Twitter, v