Square CTO: We're not worried about NFC

Square's CTO describes how the payments platform is trying to jump ahead of the competition in the mobile commerce space.
Written by Rachel King, Contributor

SAN FRANCISCO -- We're still just witnessing the early days of mobile commerce and payment infrastructures, but Square has proven to be one of the leaders right out of the gate.

There are a number of different methods of mobile payments already available, but swiping a credit card using a detachable dongle on a smartphone or tablet seems to be the most popular and easy to adopt at the moment because it doesn't require a lot of new technology for either party.

Square chief technology officer Bob Lee explained during a keynote fireside chat on Wednesday morning at MobileBeat 2012 about how Square is trying to overcome the draconian pain points of the payments industry by focusing on a different business strategy and simplicity in design.

"The original idea started simply with accepting credit card payments on cell phones," said Lee. However, he admitted that Square leaders realized early on what an arduous process that was going to be with multiple credit checks, complexity of service fees, and the fact that many small businesses don't want (or can't afford) to take the risk of jumping onto a brand new medium for processing payments.

"That really grew our scope," Lee described, explaining that focus encouraged Square to want to change the system and empower small businesses. Part of how they have done this, Lee said, was by cutting out a lot of contracts and fees, including fixed fee per transaction. Furthermore, the hardware, the now fairly recognizable white dongle for mobile devices, ships for free.

But there is still another alternative technology that is looking increasingly appealing to consumers: NFC. The idea of using a phone to replace a wallet is alluring and feels like the future, but it's still proving to be difficult to achieve as many businesses (particularly small ones) can't afford to invest in a brand new platform without the guarantee that customers are going to respond.

Lee asserted that Square isn't too worried about NFC technology, commenting that it is "a solution in search of a problem." He added that Square execs "took a step back, asking what the ideal payments solution was." Lee argued that NFC wasn't the answer. 

"With NFC, you have to take your phone out of your pocket, unlock your phone, possibly enter another pin, and then wait for it to beep," Lee lamented. "What's the value proposition there?"

Lee continued that with Square, customers don't have to take out a phone or wallet but rather they can just say their names, and the merchant can verify the customer as the name and photo appears on the register. Lee boasted that this method offers a more social experience.

"Payments were something kind of painful and annoying," Lee remarked, positing that talking to the merchant and getting to know them is just "more human."

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