Famed aviation designer William Stout’s favorite saying was “Simplicate, and add more lightness”. It’s time for more of that in the financial world.
If you haven’t done so already, go sign up to accept credit cards with your smart phone at SquareUp.com.
I’ll wait here — it’ll only take a few minutes, and it’s free. Won’t hurt a bit.
In a few days you’ll get an ingenious little widget in the mail that plugs into the headphone jack on your iPhone, iPad or Android device. Install the free app, plug in the widget, and suddenly you can accept credit cards wherever you are. Having a yard sale? Now you can take plastic for your old curtains instead of sending your customer to an ATM. Giving freelance cat yodeling lessons? Now you can accept credit cards for teaching kitties to croon. Square takes a 2.75% cut, but there are no other fees or minimums.
What Square has done is remove all the friction from the usual lengthy, painful process of opening a merchant account. Everything is still secure and antifraud measures are in use (I especially liked how I only needed to provide part of my SSN), but absolutely everything, from opening and verifying your account to using the app, is easy, fast, and completely seamless. All the bumps and sharp corners have been carefully polished off.
Imitators are already pushing back (PayPal has released a similar widget in the shape of a blue triangle, to much mockery), but Square is already processing about $4 billion in payments per year.
More to the point, every last aspect of Square’s service is incredibly polished, whereas dealing with Paypal combines the worst aspects of the IRS and the KGB. I suspect Square will hang on to their head start for quite a while.
What does this mean for credit unions? It means the bar has been raised. Square sets new expectations.
There are no legal or technical reasons that online loan apps or account opening can’t be this easy. It’s a lot of work, but it’s worth it — there’s an incredible amount of untapped value in making things frictionless.