24 June 2017
download the report now

Square roll-out delayed over security concerns

21 June 2010  |  13811 views  |  1 iphone apps on screen

Much-hyped payments start-up Square has been forced to delay shipping its product that turns mobile phones into payment card readers because of emerging fraud concerns, with founder Jack Dorsey admitting parts were released "before they were fully baked".

Unveiling his new firm to much fanfare in December, Twitter founder Dorsey predicted Square would be available for customers in the US early this year.

Now, in a letter to customers, he admits "we've let our excitement get the best of us" and says "we realize the amount of time we've taken to ship our Square readers has been frustrating, sometimes confusing, and has generated a number of questions".

The start-up initially suffered from hardware shortages but says this has been resolved with manufacturers in China.

However, a new problem has emerged. According to a letter to users from the Square support team: "We need to strengthen our underwriting infrastructure so that we can handle the huge demand for readers and still manage the risk of chargebacks and fraud."

Dorsey says Square initially moved to negate the risks by setting transaction limits but these have been set too low according to customers, prompting "rethinking and expanding" of the underwriting infrastructure.

The letter provides no details on when the product may be ready to ship, with Dorsey signing off: "We thank you for your continued patience as we work to deliver a utility you can use every day and for allowing us the time to get it right."

Finextra verdict: Reality bites for Square. Overly-hyped by the starry-eyed Silicon Valley tech press, Jack Dorsey and Co are discovering the hard way that payments processing is not as easy or as simple as it might first appear. Innovation has its place, but in the money-changing business it has to be backed up by a resilient infrastructure and water-tight contracts. There's no place for a fail-whale in the payments sphere.

KeywordsEFTPOS

Comments: (1)

Nick Green
Nick Green - ISD Consultants - Northampton | 21 June, 2010, 16:48

"Jack Dorsey admitting parts were released 'before they were fully baked'." I'd suggest that it's not even half baked yet. From the American Banker "Square charges 2.75% plus 15 cents, and on keyed-in transactions where a card is not present, the charge is 3.75% and 15 cents" which sounds worse than some bank MSC. I'd be interested to know what Dorsey is doing about PCI-DSS, PA-DSS et al. Will the product support the current 'flavour of the year' end to end encryption? I'm sure the fraudsters will be keeping an eye on eBay for a job lot of cheap square skimmers.

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Finance-related iPad apps launch

Finance-related iPad apps launch

06 April 2010  |  12549 views  |  0 comments
Twitter founder Dorsey launches mobile phone credit card reader

Twitter founder Dorsey launches mobile phone credit card reader

02 December 2009  |  15082 views  |  2 comments
Twitter founder Dorsey working on iPhone credit card reader

Twitter founder Dorsey working on iPhone credit card reader

19 October 2009  |  13688 views  |  6 comments

Related company news

 

Related blogs

Create a blog about this story (membership required)
visit www.www.fisglobal.comvisit vasco.com/news/PSD2-compliant-solutionsvisit wavestone-advisors.co.uk

Top topics

Most viewed Most shared
Live: EBAday 2017, day twoLive: EBAday 2017, day two
9294 views comments | 4 tweets | 5 linkedin
Worldpay pilots app-only mPOS for small retailersWorldpay pilots app-only mPOS for small re...
9037 views comments | 18 tweets | 27 linkedin
Live: EBAday 2017, day oneLive: EBAday 2017, day one
8461 views comments | 3 tweets | 4 linkedin
UK banks will need to change one million sort codes under ring-fencing rulesUK banks will need to change one million s...
8030 views comments | 8 tweets | 25 linkedin
What Banks and their customers can expect for the futureWhat Banks and their customers can expect...
6847 views comments | 7 tweets | 10 linkedin

Featured job

Six Figure Base + Commission + Stock Options
London

Find your next job