November 08, 2013, 5:11 PM —
Image via Square Cash
I used to think I was pretty cool, swiping friends' credit cards right into my phone.
They'd owe an irregular part of a restaurant bill, or maybe for event tickets. I'd just swipe their card into a little white square plugged into my phone, have them sign on the screen, and they received a receipt by email or text message. Boom: a friendly debt paid with plastic, silicon, and wireless signals.
To get to that point, I had to request a credit card reader from Square, set up my checking account credentials, wait a few days for two micro-deposits to go through, verify them, and then set up that accout on my smartphone. And Square, as a credit card vendor, was taking something just above 2 percent off the top of my friends' repayments. But it felt like we were skipping a few steps and letting This Amazing Modern Age eliminate the hassle of checks and the grudges of friends who owe money. It seemed like something we might all do some day soon.
About two weeks ago, however, a friend let me know that I was effectively running my own printing press, when all I wanted was a little paper. I owed $8 for lunch. He told me to try and send it through Square Cash. He had the iPhone app, I grabbed the Android app, and I typed in "8" and then his email address. I entered my debit card number and expiration and ZIP into my phone. Literally 5 minutes later, the debt was paid, and I won't have to set up that debit card again.
Image via Square Cash
Oh, and a rather big kicker: no fees, whatsoever, on either end. Even if we didn't have the app installed, I could have sent an email to my friend, added "firstname.lastname@example.org" to the CC field, and Square would have emailed us both to set up the debit-to-debit transfer. The Square Cash apps for iPhone and Android are basically glorified email format tools. Square Cash would technically work from a BlackBerry.
To say that Square Cash is often more convenient than a check is understatement. You do have to actually buy checks, and keep pens around with which to sign them, before we even get to the part where you deposit the check. And mental replacement is entirely what Square is aiming at, and why it is willing to take on the thousands or millions of small fees its users will rack up as Square Cash grows.
In the world that Square wants to build, Square is the cash register, Square Wallet is the credit card, Square Cash is the checkbook and loose bills. If you don't see Square as building an entire frictionless ecosystem, you have somehow fallen in love with banking websites and routing numbers, which you should probably keep to yourself. Some day soon, they will think up a way to tip bartenders from a phone that can work at even the lowest levels of common sense and communication (which coincide with the highest concentrations of alcohol in the blood), and we will think: remember when they used to be just that little chip you plugged in?
A potential drawback to Square Cash is that you are exposing your debit card to the web, which is something different than exposing a credit card. A friend pointed this out to me, when I compared Square Cash favorably to PayPal, Venmo, and other supposedly easy payment schemes: do we really want to be typing in our debit card numbers? Square has a lot to say about the security around its Cash tool, and Cash never actually shows the full debit card number from one party to another.
It is true that debit cards involve more potential harm than credit cards: fraudulent withdrawals can empty out your account, leaving auto-paid bills and issued checks to bounce. And while credit card companies give customers 90 days to report unauthorized activity, most banks generally require a two-day notice of bad activity to limit your liability to $50 (it gets much more expensive after that). But it is also true that Square Cash is meant for friendly and informal payments of debts, purchases, rent shares, and the like. That is why you are limited to sending $250 per week with Square Cash.
Keep Square Cash installed on your phone, or keep
email@example.com in your memory or email contacts. Right now, it's the early, fee-free days of a remarkably easy payment system between any two friendly people.