261–270 of 295 posts
The most stunning part of this is the "free" part. The Durbin amendment regulates the cost of debit transactions over the Visa/Mastercard network. It's $0.22 + 0.05%. Mossberg reports that Square is planning to monetize via "premium options" like international transfers. But still, $0.22+ is a lot to lose every time someone uses your mass-market service. Good thing they raised $341M of VC money. Who said the dot com…
The most stunning part of this is the "free" part. The Durbin amendment regulates the cost of debit transactions over the Visa/Mastercard network. It's $0.22 + 0.05%. Mossberg reports that Square is planning to monetize via "premium options" like international transfers. But still, $0.22+ is a lot to lose every time someone uses your mass-market service. Good thing they raised $341M of VC money. Who said the dot com…
$0.22 is pretty cheap for customer acquisition though.
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I didn't say dot com got anything wrong. I'm saying raising hundreds of millions of VC dollars and practically giving it away is a dot com era strategy. Remember when PayPal paid out a $20 referral bonus for each new customer? Yeah, those days.
Well, you're not saying that didn't work out for PayPal, are you? :)
It's worth looking at how PayPal tried to steer towards profitability in later days, though. They basically became more evil. When paying merchants, they try to trick you into preferring ACH transfers direct from your checking account over using your credit/debit card. The former has weaker consumer protections, no rewards and risks overdraft fees, but lets PayPal keep almost all of their 2.9% + $0.30 fee, since ACH costs just pennies.
Not saying Square is going to become evil. Just saying they'll have to figure out how to break even with it eventually, because right now there's a built-in operational loss that scales with usage.
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$0.22 is pretty cheap for customer acquisition though.
It's not just for acquisition. It's an ongoing operating cost.
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This is almost exactly the same system as Interac in Canada. Will work well until the fraudsters figure out they can steal with it then limits will happen. Wonder what the merchant fees are and if they seize accounts for receiving an arbitrary amount of payments
There are no fees by the looks of it; it's completely free.
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The US equivalent is ACH, which has the major downside that using only the bank ID (routing number) and account number you can effectively wipe out the target's account. It's up to your bank (or whatever ACH proxy) to keep you from doing that, not to the interchange, both legally and technically. ACH also takes several days to work, and has a wide window for either bank to declare the transfer fraudulent, so many ban…
It's bad. One time I mistakenly reversed the source/destination when sending my roommate two months of rent money and I over drafted his account because it took the money without asking his permission. Once the accounts are linked, either party can pull/push money without the other's approval.
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So one day you get an email that you got $100 and all you need to do as a recipient is to click on a link and enter your full credit card details? Sounds like a phishing paradise.
Not even a credit card - a debit card! In the US at least, these are not covered by the $50 limitation on losses on unauthorized transactions. In practice the banks often honor that anyway, but AFAIK they don't have to. In this case however, it appears the bank could argue that when you got phished, you gave access to a third party. Wow. I would never do this. It's a good practice never to use a debit card online, an…
The most stunning part of this is the "free" part. The Durbin amendment regulates the cost of debit transactions over the Visa/Mastercard network. It's $0.22 + 0.05%. Mossberg reports that Square is planning to monetize via "premium options" like international transfers. But still, $0.22+ is a lot to lose every time someone uses your mass-market service. Good thing they raised $341M of VC money. Who said the dot com…
I believe the original Square payment system processes billions of dollars in transactions every year at 2.0%. Perhaps this is more of a customer acquisition platform with premium features to come.
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Well, you're not saying that didn't work out for PayPal, are you? :)
It worked out for them (being bought), but I think you could relate it to a pump and dump scheme.