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Sweden's Square hits App store

19 August 2011  |  14061 views  |  4 iphone apps on screen

A Square-like European start-up, called iZettle, that turns phone handsets into card payment terminals, has officially launched in Sweden.

Following a closed beta, the iZettle application for iPad, iPhone and iPod touch has now gone live on the Swedish App Store.

The system lets users accept low value payments by simply entering the amount and customer's card number in the app.

However, for bigger payments, merchants attach a plastic card reader to their device which automatically opens the app. They then enter the payment amount and the customer signs on the device's screen, adding an e-mail address if they want a receipt.

The company charges 2.75% of the sale plus 1.50 SEK for each transaction but is throwing in the reader for free for the first 2000 customers to sign up.

IZettle says security is "at the heart of our business" and it has received the approval of EMV and says it adheres to PCI-DSS data handling requirements.

Although it works with chip, not mag-stripe, cards, the system is similar to that offered by US outfit Square, which has proved a big hit in the US, recently raising $100 million in a series c funding round, valuing the start-up at $1 billion.

Jacob de Geer, founder, iZettle, says: "Whether you're a merchant with a storefront, a plumber working in someone's home, selling produce at the farmers market or settling the bar bill between friends, iZettle makes payments convenient from your iPad, iPhone or iPod touch."

Comments: (4)

Christopher Williams
Christopher Williams - RTpay - Boca Raton | 19 August, 2011, 17:59

this is very interesting - we were wondering when a chip reader would be created.

one question; is there a risk of patent infringement? Has Square filed for a patent? I would expect they did. 

and a second question; if it works for Sweden, can iZettle license it out for other countries? Our non-profit is looking for such a facility for developing countries - any information would be much appreciated.


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A Finextra member
A Finextra member | 22 August, 2011, 04:48

I believe this can be good hit for traditional POS systems, which are quite expensive and are limited for single purpose. But still I wonder, why seperate hardware (like square, iZettle) are required to attach in the phone? Why can't apple develop iphone hardware, which can read chip or magnetic stripe directly. If application & hardware (iphone, ipad, itouch) are already PCI certified for accepting card payments using external reader then a small mag/ chip reader can be inbuilt in the hardware itself.

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Matt White
Matt White - Finextra - Toronto | 22 August, 2011, 09:19

@ Christopher

On patents, I'm not sure of the exact situation but obviously Square is a US firm, currently only operating there. There are also similar, rival systems from both Intuit and Verifone.

On your second point, iZettle plans to start operating in other European countries within months. If you want to discuss licensing for developing countries I'd start by emailing hello@izettle.com.

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A Finextra member
A Finextra member | 23 August, 2011, 07:44 Security with chip or not? The keying in of card no in face to face retail should be 100% abandoned since it is unreliable and unsecure. A keying error may cause someone else to pay and a fraudster can key any known card no until this card is blocked. Even if a merchant pays for fraud and error there are quality loss costs for issuers and cardholders to consider as well.How secure is the processing of the card details after key entry in the phone - can they be retrieved by a fraudster trojan programme since the phone also manages many applications outside the control of card acquirer domain? On the chip reading issue - it does not offer pin verification and unless you also provide a paper slip with card no to sign there is no customer authorisation proof. If the pin capability and encryption protection/tamper proof capabilities are built into mobile phones these phones become expensive modems for payment terminals. Should card payments develope towards key entry of card numbers and chip purchases without pin after the banks in Europe have launched some 600 million chip cards with on/offline pin capability and merchants have deployed nearly 8 million chip+pin capable terminals?
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