Square’s Apple Pay Reader Is Going on Sale at Apple Stores


By Cade Metz for Wired magazine,

SQUARE IS NAMED after its credit card reader, which lets merchants accept payments through an iPhone. But in the fall, the company took a new turn, offering a device that also accepts payments made from an iPhone. And now, this device is going on sale at Apple stores.

Square’s newest reader accepts payments from both smartphones and the new breed of credit card known as EMV, which includes a built-in security chip. Apple will sell the new Square reader for $49 both online and in its retail stores. Square has previously offered its new reader through it own site for the same $49 price, but it has not sold the device through retailers other than Apple. Its original credit card reader is also available through Apple. “Retail has been a very good channel for us,” says Jesse Dorogusker, who oversaw the creation of the new reader as Square’s head of hardware. “It lets you be in front of more people in a different way.”

The new arrangement brings a certain synergy to the rapidly changing world of mobile payments. Apple is eager to promote its “contactless” payment service Apple Pay, and this is among the smartphone payment systems handled by the new Square Reader. So: Apple promotes the Square reader, and the Square reader promotes Apple Pay.

The move comes at a time when the payments industry is struggling to reinvent itself. This past October 1 was the deadline laid down by the major credit card companies for merchants to accommodate cards that include an EMV security chip. As of that date, merchants are liable for any credit card fraud if they haven’t installed systems that can accept the new cards.

But October 1 is really more of a starting line than a finish line. It gave a merchants an incentive to make the transition, and experts say that another three years may pass before the transition is complete. As of October, according to one survey, only about 25 percent of merchants had made the switch.

Meanwhile, companies like Apple are pushing towards payments that eliminate plastic cards altogether. So far, Apple Pay is mostly accepted only at big chains that hatched deals with Apple, such as Walgreens and Whole Foods. But the new Square reader can expand Apple Pay into small businesses—Square’s target customers.

Square too is transition after a rocky IPO. The company will continue to offer its old-fashioned mag-stripe reader for free, but its future rests with the new reader. Some question whether services like Apple Pay will really catch on, since regular credit cards are already very convenient. But as the market has pushed stores and shoppers towards EMV, this technology has been slow and unpredictable in many cases, and this could provide an opening for Apple Pay.

The article first appeared in the Wired Magazine.