updated 08:25 am EST, Thu March 10, 2011
Square rebuts VeriFone on mobile payment security
Square founder Jack Dorsey in a letter rebuffed the claims made in VeriFone's smear attack on his Android and iOS mobile payment readers. The accusation of easy data 'skimming' was "not a fair or accurate claim" and overlooked the basic reality of credit cards. Anyone who you give a credit card already has enough to get information, and no encrypted system would stop this, Dorsey said.
"The waiter you hand your credit card to at a restaurant, for example, could easily steal your card details if he wanted to -- no technology required," he explained. "If you provide your credit card to someone who intends to steal from you, they already have everything they need: the information on the front of your card."
He also noted that VeriFone's warning of "massive" financial damage from Square was fearmongering that deliberately sidestepped not just basic credit card responsibility but the extra protections Square had that others didn't. If fraud happens, the bank can reverse the charges. Buyers also have the option of an e-mail or SMS receipt for every transaction, unlike with most dedicated credit card machines.
The executive also directly responded to VeriFone's attempt to scare JP Morgan Chase and other companies away from doing business with Square. JP Morgan constantly verifies Square's service, Dorsey said.
While Square could potentially streamline collecting information for fraud simply by having an always-on Internet device swiping credit card information, the VeriFone remarks have widely been interpreted as a strictly self-interested move meant to steer users either towards VeriFone's own PAYware mobile option or towards its traditional credit card processors. VeriFone has been hurt by the introduction of Square, in no small part through the free reader devices and the relatively low cost for each transaction.