6 ms·

(Full disclosure, I'm a stock holder in Square) There are two good reasons Square doesn't do this that I can think of off the top of my head. First, CNP vs CP

by socmoth 15y ago

(Full disclosure, I'm a stock holder in Square) There are two good reasons Square doesn't do this that I can think of off the top of my head. First, CNP vs CP card processing rates. http://en.wikipedia.org/wiki/Card_not_present_transaction http://en.wikipedia.org/wiki/Card_not_present_transaction Every credit card has the CC number encoded in to the back of the card, but in addition to that, it has a couple bytes of extra information. That extra information qualifies the merchant for a lower processing rate if they SWIPE the card. That means, when you take a picture, you are paying closer to 3.5% instead of 2.75% for every transaction. (rates quoted are square's cp vs cnp rates) Some merchants are extremely sensitive to this, other aren't. The larger a merchant is, the more likely they are going to care. On the other hand, no merchant wants to lose a sale, 3.5% of a sale is still better than 100% of a lost sale. The other reason is based on UX. It feels really weird to have someone take a picture of your credit card using their cell phone. The apps that use this technology might be doing anything with that image. Otoh, more people should take credit cards! (edit: Sidenote, Square considered doing this before the swiper was invented, during the very first month or so. Doesn't mean it is a bad idea, just that Square moved away from it in favor of a swiper.)

https403 15y ago
Also did you notice its 15¢ per scan!! I believe it will add on to the 10¢-15¢ + percentage merchants have to pay to the processor per Transaction.
- socmoth 15y ago
  Yeah, this matters way more for transactions less than 5 dollars where it starts to be a large %. If you go to 100 dollar range, it doesn't matter at all. The 10-15 cents just means they are looking for people who sell big things, not coffee shops.
  - ryanmickle 15y ago
    Or lots of little things over time. The user only needs to scan the card the first time.
frederickcook 15y ago
When I first saw this, I had a different use-case in mind, where a person would just take a picture of their own credit card for an in-app purchase, instead of a vendor using it to accept money from another person. (Hence the focus on developers.) If you AB tested giving someone a screen where they put in their credit card number, or a screen where they just took a picture of it, you might find that people are more willing to take a picture. People are probably more comfortable with a photo of their credit card being taken on their own phone than someone else's phone. To the app, both of these are CNP transactions.
- ninwa 15y ago
  That was my initial thought too. Instead of having to type all of your information using a tiny keyboard or on-screen one, you just snap a picture. I suppose, though, that most online markets allow you to save your information and the problem really isn't that big after the first entry. Something like this is kind of neat, but nothing new or novel. OCR has been good enough to do this for a long time.
rottencupcakes 15y ago
> The other reason is based on UX. It feels really weird to have someone take a picture of your credit card using their cell phone. The apps that use this technology might be doing anything with that image. To be fair, any company that gets my credit card number (restaurants, Walmart, Amazon, every random e-shop on the internet) could be doing anything with my credit card, so this concern isn't exactly new or very scary.
- timerickson 15y ago
  To you, no. Consumers have an irrational understanding that swiping a credit card is safe. Taking a picture of it is likely the sketchiest action a merchant could take, in the eyes of the average uneducated consumer.
  - ericd 15y ago
    This cannot be overstated. Companies live or die based on the perceptions they create, technical details be damned.
richcollins 15y ago
Otoh, more people should take credit cards! We should be moving away from credit cards. They are becoming an archaic technology.
- chrisbolt 15y ago
  What do you propose we replace them with?
  - thinkcomp 15y ago
    http://www.facecash.com http://www.facecash.com
  - richcollins 15y ago
    Our phones
- ryanhuff 15y ago
  While low-tech, credit cards are very flexible. I worry that the more high tech approaches (NFC, etc) are motivated not because its a step forward, but because its an opportunity to grab more control of the market, and leave consumers more exposed to fraud.
  - richcollins 15y ago
    How are credit cards more flexible than a computer in your hand? Worst case your phone acts exactly like your credit card where you read numbers off of it. Also, how would a phone lead to more fraud? You could authorize each transaction by cryptographically signing it after entering a passphrase. With a credit card anyone that steals your numbers can charge to it.
    - bonzoesc 15y ago
      Magnetic credit card readers are cheap; look at how much Square charges. The fraud prevention mechanism for magnetic cards is mostly reactive and doesn't require "passphrases" or "cryptographically signing," which is a big usability win. Since issuers are on the hook for unauthorized charges, and generally make money from transaction fees, it's in their best interest to find a good compromise between fraud protection and usability. Adding consumer software and a wide variety of commoditized portable computing devices into the mix doesn't seem worth the cost.
davidedicillo 15y ago
I think you are missing the point. This is not meant to be used like Square is. This is meant to be embedded into other application that accepts in app purchases that can't be done with the In App system provided by Apple.
salman89 15y ago
On the other hand, Square requires a merchant to have particular hardware to receive payments (swiper), this method does not. Good point on the CNP vs CP though, I never knew about that.
gonzo 15y ago
The other reason to run CP .vs CNP is, of course, fraud resolution. If you had the card in your hand, it's much less likely to have been someone running an online scam. But the, why doesn't having a photo of the card in-question also qualify for a CP? I think Square moved toward being able to swipe because it's more 'traditional'. People were going to be upset about vendors taking a pic of their card.

by socmoth 15y ago

https403 15y ago

Also did you notice its 15¢ per scan!! I believe it will add on to the 10¢-15¢ + percentage merchants have to pay to the processor per Transaction.

socmoth 15y ago
Yeah, this matters way more for transactions less than 5 dollars where it starts to be a large %. If you go to 100 dollar range, it doesn't matter at all. The 10-15 cents just means they are looking for people who sell big things, not coffee shops.
- ryanmickle 15y ago
  Or lots of little things over time. The user only needs to scan the card the first time.

frederickcook 15y ago

When I first saw this, I had a different use-case in mind, where a person would just take a picture of their own credit card for an in-app purchase, instead of a vendor using it to accept money from another person. (Hence the focus on developers.) If you AB tested giving someone a screen where they put in their credit card number, or a screen where they just took a picture of it, you might find that people are more willing to take a picture. People are probably more comfortable with a photo of their credit card being taken on their own phone than someone else's phone. To the app, both of these are CNP transactions.

ninwa 15y ago
That was my initial thought too. Instead of having to type all of your information using a tiny keyboard or on-screen one, you just snap a picture. I suppose, though, that most online markets allow you to save your information and the problem really isn't that big after the first entry. Something like this is kind of neat, but nothing new or novel. OCR has been good enough to do this for a long time.

rottencupcakes 15y ago

> The other reason is based on UX. It feels really weird to have someone take a picture of your credit card using their cell phone. The apps that use this technology might be doing anything with that image. To be fair, any company that gets my credit card number (restaurants, Walmart, Amazon, every random e-shop on the internet) could be doing anything with my credit card, so this concern isn't exactly new or very scary.

timerickson 15y ago
To you, no. Consumers have an irrational understanding that swiping a credit card is safe. Taking a picture of it is likely the sketchiest action a merchant could take, in the eyes of the average uneducated consumer.
- ericd 15y ago
  This cannot be overstated. Companies live or die based on the perceptions they create, technical details be damned.

richcollins 15y ago

Otoh, more people should take credit cards! We should be moving away from credit cards. They are becoming an archaic technology.

chrisbolt 15y ago
What do you propose we replace them with?
- thinkcomp 15y ago
  http://www.facecash.com http://www.facecash.com
- richcollins 15y ago
  Our phones
ryanhuff 15y ago
While low-tech, credit cards are very flexible. I worry that the more high tech approaches (NFC, etc) are motivated not because its a step forward, but because its an opportunity to grab more control of the market, and leave consumers more exposed to fraud.
- richcollins 15y ago
  How are credit cards more flexible than a computer in your hand? Worst case your phone acts exactly like your credit card where you read numbers off of it. Also, how would a phone lead to more fraud? You could authorize each transaction by cryptographically signing it after entering a passphrase. With a credit card anyone that steals your numbers can charge to it.
  - bonzoesc 15y ago
    Magnetic credit card readers are cheap; look at how much Square charges. The fraud prevention mechanism for magnetic cards is mostly reactive and doesn't require "passphrases" or "cryptographically signing," which is a big usability win. Since issuers are on the hook for unauthorized charges, and generally make money from transaction fees, it's in their best interest to find a good compromise between fraud protection and usability. Adding consumer software and a wide variety of commoditized portable computing devices into the mix doesn't seem worth the cost.

davidedicillo 15y ago

I think you are missing the point. This is not meant to be used like Square is. This is meant to be embedded into other application that accepts in app purchases that can't be done with the In App system provided by Apple.

salman89 15y ago

On the other hand, Square requires a merchant to have particular hardware to receive payments (swiper), this method does not. Good point on the CNP vs CP though, I never knew about that.

gonzo 15y ago

The other reason to run CP .vs CNP is, of course, fraud resolution. If you had the card in your hand, it's much less likely to have been someone running an online scam. But the, why doesn't having a photo of the card in-question also qualify for a CP? I think Square moved toward being able to swipe because it's more 'traditional'. People were going to be upset about vendors taking a pic of their card.