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Summary:

Jack Dorsey’s Square, Incase, Verifone and now Mophie — these companies have developed credit card readers and are turning the iPhone/iPod touch platform into a new kind of economic engine. All they have to do is get Apple to play ball and get consumers savvy about it all.

iphone-gets-credit-card-reader.jpeg

The Mophie Credit Card Reader

Jack Dorsey’s Square, Incase, Verifone and now Mophie — these companies’ credit card readers are turning the iPhone/iPod touch platform into an e-commerce engine.

Mophie, a Los Angeles-based company that makes accessories for the iPod/iPhone devices will release a credit card reader at CES in January 2010. The device is going to have a reader and a software that would allow small businesses to take credit cards. No more details are available just yet.

I, for one, would like to see Mophie or one of these other startups come up with a way for me to scan my own credit card to enter it into an app or web site. Even better, I’d love it if they married their hardware with the functionality of something like 1Password. In doing so, they could enable e-commerce via the iPhone apps. Think of it as iEconomy.

I know, I know — it’s easier said than done, considering it would need some deep, system-level mucking around, and Apple isn’t going to let that happen. But it should! By opening up, it would make the iPhone into an even more useful platform.  While I can understand Apple’s hesitation at opening up the iPhone, it can start with iPod touch, which is not tethered to a wireless phone company’s network.

By focusing on the consumers, these companies can also overcome two things: somewhat finite number of likely small business customers and get scale, which would allow them to get cheaper. And this would also help them overcome the slower adoption rates normally encountered when chasing the small business market. In fact, companies such as Visa, MasterCard and large banks should be trying hard to figure out how they can put these kind of readers in the hands of both merchants and consumers, thus shifting even more transactions into the electronic realm.

The Verifone Card Reader

OK, you can see I am just way too excited about this stuff. Why not? I am encouraged to see such experimentation. It ties in with my big belief: the marriage of computing and connectivity without the shackles of being tethered to a location is the the biggest disruptive force of our times, and it will redefine business models for decades.

For a long time, companies like Symbol Technologies, a division of Motorola, have been making point-of-sale and handheld computing devices for non-office environments such as retail locations and warehouses. It is becoming obvious by the day — they are amongst those being disrupted.

I am looking forward to more Mophies and Squares!

This article also appeared on BusinessWeek.com.

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  1. I would suggest the way to propel the “IEconomy” is to allow transfer of funds via itunes accounts. It would be very cool for a consumer to visit a store and pay by simply connecting to the stores wifi or bluetooth network and transferring funds. I don’t think this would require “deep system level mucking” or anything of the sort, it would just take someone like Interact with deep pockets to develop a secure app.

    Actually, its easier than that.
    Interact simply offers a free itunes app that stores debit/credit card info. They then provide the retailer with an easy to remember “ID”. When you’re shopping you simply key in their ID, your PIN for your account, and then the money is transfered. Itunes is already set up to charge money as is the case with subscriptions and pay-for-service apps.

  2. It seems like just 1 Password would be enough. Why do you want to physically scan your card each time? 1Password is already more secure than a physical card, if you use a good, long, unique, weird password.

  3. Both Morphie and related HW manufacturers including Apple would need to come under PCI compliance to pull this off. Not sure they’d sign up for the liability and costs.

  4. There are lots of other problems which are to be solved in the payment card economy which nobody is paying attention — google visa/mastercard, merchant fees, etc — Anyways, using the iPhone (and adding on an hardware) to accept credit-cards is cough a weird idea. A POS terminal sells for $100 and on top of that the acquirer bank (or an intermediary SI) gives it free when the merchant signs up.

    Yeah, the one place I would need an iPhone’s card acceptor is while buying Pina Colada’s in the swim suit at the beach (cards are waterproof, thanks!).

    As for for personal usage, Om, we don’t need a terminal attached to the phone/PC — someone needs to revive the browser-based wallet (remember VeriFone/Microsoft’s wallet?). Well, wallet died prematurely as the tech stack was way too complicated for the 1999 internet user.

    Happy new year.

    Cheers,
    Indus
    01/01/10 12:22am Bangalore local time

  5. on the lighter side, i have a deja-vue from the mid ’90s, same pics, just with Motorola StarTac :). We made a long way since .. or haven’t we?

  6. ….”Both Morphie and related HW manufacturers including Apple would need to come under PCI compliance to pull this off”…

    Stay tuned next week from a couple of companies, including Simply Swipe It for hardware that does meet PCI compliance….

  7. Apple wants you to only buy through iTunes. Expect them to compete with Paypal soon.

    I do welcome the idea as a mobile IT Tech to be able to easily take credit card payments in the field.

  8. Patty DeDominic Friday, January 1, 2010

    I would like to republish this article on my blog. You have some great points and job seekers and career navigators need to stay up to date on new tools and trends.
    http://www.thenewnewworldofwork.com

    a free resource for job seekers in the USA

  9. Oh come on. If western capitalism is going to be transformed because people don’t have to type in their credit card number, then we have become simultaneously indolent and decadent. To the point of extinction. Is this really the last thing that needed inventing?

    And what’s all this fuss about swiping? I’ve not had the mag stripe on my cards read in the last 3 years. Europe, India, Brazil, South Africa all use chip-and-pin terminals.

    Where is my talking computer, direct neural connection, head up car dashboard, bionic injury repair, home-made solar cell recepie? For glod’s sake, if this is the best we can do, making something we used to make in the 1970s slightly smaller, then what hope is there? It looks like a 1974 HP-65

  10. While all these card readers are cool to play with, I just don’t see them taking off to the same degree that Paypal has. Are you really going to carry a card reader around with you as you go from store to store?

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