RSS
Obama’s secret fundraising weapon: What is a Square card reader?
Tiny white payment dongles will soon be hitting the campaign trail. Here's what you should know about this election year's potential "game-changer"
The Square credit card reader is a digital payment system that attaches to iPhones and Androids and will be taking donations during Obama's re-election campaign.
The Square credit card reader is a digital payment system that attaches to iPhones and Androids and will be taking donations during Obama's re-election campaign.
Target.com
P

resident Obama isn't afraid to embrace new technologies — just look at Monday night's Google+ Hangout. Now, according to Politico, Obama's campaign staffers will set out on the trail wielding Square credit card readers for their Androids and iPhones to collect contributions. But what, exactly, is a Square card reader? Here, a quick primer: 

What is it?
It's a digital payment system that attaches to your smartphone through its headphone plug. The company's goal is to make "credit card sales as easy for retailers with an iPhone as it is for some dude selling a couch on Craigslist," says Fast Company. Instead of entering credit card data with a keyboard, users can simply swipe their physical cards to make a payment. It would work for everything from splitting a restaurant bill to, in Obama's case, making a campaign donation on the spot. The tiny white square dongle and smartphone app are free, and Square takes a per-transaction fee of 2.75 percent for all major credit cards. 

Why use it on the campaign trail?
Traditionally, "if you want to donate money at a fundraising event, you often have to fill out a form and hand over a check or cash at the event," says Leena Rao at TechCrunch. But people often forget their checkbooks or neglect to carry cash. The Square reader fixes that, by processing donations instantly, and sending contributors an immediate receipt via text message or email. Plus, the tiny reader takes away "the necessity of check-out hardware," says Meghan Kelly at Venture Beat. The system is "inherently mobile," and campaign staffers "could walk through the crowd and accept money on the spot." 

Is it safe?
Like any payment system, it isn't without its flaws. Last year, hackers demonstrated that they were able to use the devices to steal credit card numbers. But it's difficult for "frauders to set up dummy accounts" with which to siphon money, says Sarah Perez at Read Write Web. But hacking Square's app "requires a lot of effort," and "there are still much easier ways to commit fraud."

Have candidates tried this before?
Square readers have been used by candidates in California running for state assembly positions and Congress, but this marks the first time the technology will be used on a national scale. And Republicans aren't far behind. "Mitt Romney's campaign plans to announce a similar Republican-themed Square application on Tuesday" for a "beta test," says Nick Bilton in The New York Times. "In 2008, online donations were a game-changer for the election," said a Square spokesperson. In 2012, "mobile payments will be the game-changer."

Sources: Fast Company, NY Times, Read Write Web, TechCrunch (2), Venture Beat

EDITORS' PICKS

THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER

Subscribe to the Week