Jack Dorsey, founder of Square and Twitter, just took aim at the credit card.
Today, Square announced a new app called Card Case, a new way to pay merchants who use Square to process payments.
The big idea: Instead of taking your credit card out of your wallet every time and handing it to the merchant to pay, on repeat visits, you’ll be able to pay with one tap in the Card Case app.
Here’s how it works: The first time you pay at a participating merchant, you’ll still have to have your card swiped manually.
Once you get a receipt text messaged to your phone, you can download the Card Case app and open a “tab” for that merchant.
From that point on, because your card info is stored in Square’s servers, you can pay the merchant through the iPhone app. No more swiping your card every time you shop.
You’ll also be able to use the app to see what’s for sale and to review your receipts and purchase history. And, it includes a directory of stores nearby that accept Square.
The obvious idea is to make payments “frictionless” — easier and faster for the user and merchant. (Assuming that the app is fast enough that it is actually more convenient to pay this way than just to have your card swiped. Wireless data networks aren’t always reliable, etc.)
But it’s clear that Square is also trying to marginalize the credit card with this product.
Sure, it uses your credit card account to make the actual payment, but that could just be temporary. There’s no reason it HAS to be a credit card. Square could easily swap in a direct connection to your bank account or some sort of Square account at some point in the future.
The credit card is losing mindshare in the transaction, and is becoming the equivalent of a “dumb pipe” — totally replaceable.
So, what’s happening here?
First, Square is making shopping easier for the buyer and the seller, and that’s good news.
But it’s also putting itself in a strategic position to disrupt the massive credit card industry. It will be hard to make much of a mark, and it’s unlikely you’ll be able to throw your cards out at any point — you’ll still need them for something. But it’s a good start, and worth trying.
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