updated 09:20 am EDT, Fri April 29, 2011
Square reader to get encryption support
Square has quietly confirmed that a new version of its reader was coming with built-in encryption. The iOS and Android device will now have safeguards even during the swipe itself. COO Keith Rabois said the goal was to meet Visa's best practices for mobile apps, including encryption across the entire process.
The new reader is due in the summer. It's not clear if or when Square would mandate the new reader to keep processing credit cards.
Square is likely to have endorsed the guidelines as a promise after Visa invested in the company and gave it official support. Visa has championed Square as a way of spurring on credit card use in places where it was previously impossible, but it might want reassurances that an embarrassing hack would be difficult.
The decision to encrypt might provide some fodder for VeriFone's attempted scare campaign. The traditional payment processing firm had mentioned the in-the-clear transmission of data to the app as a possible avenue of attack. Many of its claims were quickly discredited, however, as it was ignoring the inherent risks of using a credit card with any system and trying to portray Square as inherently dangerous.
VeriFone will now have a much more difficult case and will have lost one of its fewer advantages. The company's attack was motivated by an attempt to protect its established business, but Square's reader and transaction cuts have usually been less expensive to get and maintain than VeriFone's legacy, tethered readers or its more elaborate but not necessarily more advanced mobile options. [via TechCrunch]