Paying for Food on the Street with a Cell Phone?

photo credit: Pay using a Cell Phone

Will cash become totally obsolete? Square, the plastic card reader cell phone attachment, makes it easy for street vendors to accept credit cards. No merchant account is needed for the vendor to accept payment.

Paying for Food on the Street with a Cell Phone?

Square, a product of Twitter Inc. creator Jack Dorsey, uses a little “square” attachment and downloadable software to make the transaction from a Smartphone. The Square plugs into the headphone jack of the iPhone or Android based Smartphone, and then is processed through Square’s secure servers. Apps for Palm Pre and BlackBerry are supposed to be coming in the near future.

After swiping the card through the reader, the buyer signs for the transaction by using finger strokes on the touch screen. The buyer can type in an e-mail address where a digital receipt will be sent. Square charges a fee of 15 cents and 2.75% of the transaction amount to the person processing the credit card. That would amount to 42.5 cents for a $10 purchase.

A version of Square for the iPad is also available. It enables store owners to input and track inventory and handle cash transactions, replacing pricey point-of-sale cash registers and terminals.

“The future has arrived,” tweeted Mayer Hawthorne, a singer and songwriter who used Square to sell his CDs and merchandise while on the road.

While convenient, where is this trend headed? Already you can send money between friends by “bumping phones.” With the app pulled up on both phones involved, the amount of the transaction is input on the payer’s phone. Money changes hands by physically bumping the two phones together. Both of the users must have a PayPal account tied to a bank account or the fees charged will be even higher than Square’s fees.

This certainly does eliminate having to carry a pocket full of change to buy lunch from the hot dog seller. Am I ready to eliminate carrying money? Perhaps not just yet. A concern is that we are giving more control to banks than ever before. There’s something reassuring about cash. What’s your take on it? Feel the need to actually “feel” your money? Like the weight of that money clip in your pocket?