PAYware mobilizes credit card buying, takes on Square

February 1, 2010 | David Pierce | Comments |
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As business and commerce go mobile, payment technology is playing catch-up, trying to come up with a simple and powerful way to allow businesses to accept credit card payments on the go (because who even uses cash anymore?).

One possible answer is PAYware, the mobile-payment system coming from point-of-sale giant VeriFone. PAYware finally saw its app go live in the iPhone App Store today, bringing its secure credit card transactions to the iPhone, and making itself the first real competitor to Twitter co-founder Jack Dorsey’s, Square.

PAYware, which looks like half an iPhone case, is a credit card reader that collects, transmits, and confirms payments for you anywhere you get iPhone service. Customers can sign for their purchases right on the screen with an included stylus, and with one tap have a receipt sent to their email address. On the merchant side, everything gets synced and tracked with VeriFone’s Web interface. It’s simple, and totally mobile — business can happen in-store or across the world.

So far, so Square-like. But the niche VeriFone is trying to carve out with PAYware is for businesses that need more security and more support than, say, vendors at a flea market. VeriFone is an established player in the point-of-sale-system world with a heavy emphasis on security, and is implementing similar standards with PAYware. Users are required to have a “merchant account” (an agreement with a bank that proves you’re a legitimate business), and there’s some hefty encryption from VeriFone in every part of the transaction.

That makes PAYware a secure, trustworthy system — with a lot fewer potential users than Square. First of all, it’s only on the iPhone 3G and 3GS, while Square is quickly on the way to working on everything with an Internet connection and a headphone jack, and for everyone from Fortune 500 companies to hot dog vendors. PAYware has said it will support other devices in the future but has both hardware and software hurdles to clear that Square — which just plugs into a headphone jack — doesn’t have to overcome.

Users also pay a premium for the extra layer of security from PAYware — there’s a $49 activation fee, a monthly fee, and a fee for every transaction. Square, by comparison, only charges the transaction fee.

For businesses concerned with security and wanting to work with an established player like VeriFone, PAYware may have some staying power. But as far as adoption by average Joes, something Square’s certainly aiming for, PAYware’s barriers are a littler higher. Whichever model wins out, it’s going to bring a whole new accountability to “dude, I’ll totally pay you back.”

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About the Author, David Pierce

David Pierce is a recent graduate of the University of Virginia, and a tech geek since the day he could hold a keyboard. He has his own blog, Digitizd, and has blogged around the Web as well as worked for New York Times columnist David Pogue. Follow him on Twitter @piercedavid and catch his stories @Venturebeat.

  • PAYware Mobile has definitely come out on top of this. Square is taking their time contacting interested parties if people are lucky enough to get a call and VeriFone is signing up thousands of customers. Apple will soon be selling the VeriFone iPhone credit card reader in the Apple stores.
  • Curi0S
    If I were Dorsey, I'd worry about solutions like this one that pay Apple a premium to connect to their preferred 30-pin dock connector at the bottom of the phone as opposed to Square's use of the earbud socket at the top (while paying nothing to Apple). Apple claims to promote fairness in their AppStore. How long before Apple bumps the Square app out in response to the cries of "foul play" from those playing and PAYING by Apple's rules?
  • I'll bet that PAYware takes a good part of the market, just because psychologically, the hardware looks more secure because the device is larger and more connected, as opposed to the small cheap-looking square.
  • Once again it seems the apple team is leading the way for computer solutions to business concerns. Wasn't their a time when a credit card was considered a luxury item? I know I expect my in home pc repair clients to be able to pay me as efficiently and safely as possible. This would help.
  • ammosov
    How long it will be before US will get CARRIER BILLING that is kicking ass in Asia and Europe for years already?
  • Without a doubt Square is therefore well positioned to challenge the providers of mobile terminals and gateway services. The Verifones of the world or startups such as Way Systems have offered solution still too expensive and inflexible for your proto-typical mobile merchant (for instance the Mary Kay reseller who wants to take payments, get it reported to her accounting software, have the order processed with the head office, get a receipt for the client, track the order later on...).
  • luis
    I think it's important to state that VeriFone as well as Square are using the exact same backend to do transactions. Therefore they both have the same security at the end of the day. VeriFone model is more in line to what they already have today and perhaps much of their clientele will be the banks.

    What's interesting to see here is how VeriFone for many years had the ugliest wireless terminals in the market compared to some of the European players and Apples hardware made them think faster. It is obvious that they feel threatened by the disappearing hardware business in which they have been for many years. VeriFone cannot and will not compete in this space where Square wants to play and that is the masses.
  • When you take into account the advice of people like Jeff Jarvis regarding WWGD if they got into the mobile payment space, then they would probably do it the way Square is. Square has a number of tremendous advantages such as its across the board compatibility with the lowest common denominator of phones and that they have created a service with no cost of entry, not to mention its small footprint is fantastic and as Jarvis might say it uses the least possible amount of atoms needed to function as opposed to this Payware device which is ridiculously huge. There is no doubt that the adoption rate for their device will be off the charts unless competitors are capable of exposing any security holes in the software but from our current understanding, it is just as secure as VeriFone. This model of making money on the float has worked time and time again, examples include, Ebay and Paypal. I'm anxious to see how it works and will definitely get it when its available. It's going to certainly make splitting the dinner bill much easier and I'll probably make some money on the float myself.

    Check out our current review for it here: http://www.baduku.com/topics/square-mobile-paym...
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