Square’s New App Could Prove A Boon To Campaigns, Non-Profits

by Adrianne Jeffries

Twitter co-founder Jack Dorsey is making the unusual leap from software to hardware with his new startup Square — a device that enables anyone to accept credit and debit card payments with a smartphone. His company has been touting its value to small businesses since February, but the device also has the potential to revolutionize fundraising for non-profits, advocacy groups and political campaigns.

Square replaces the credit card processing systems used by most organizations that process credit-card transactions: often-expensive card readers, complicated transaction fees and onerous contracts from banks and processing companies. Instead, Square offers a free device that plugs into the headphone jack on an iPhone or Android phone and a straightforward fee system: $.15 plus a 2.75% to 3.5% transaction fee. That’s often ends up being cheaper than the bundle of verification fees, transaction fees, statement fees, set-up cost and monthly minimums that come with the traditional swipers.Square went wide in November after a ten-month pilot and is now processing millions of dollars in mobile transactions a week, according to TechCrunch.

“We realized that 90 percent of Americans use these plastic cards; they use them for everything… Paying with them is easy, but receiving from them is very difficult,” Dorsey told the New York Times in January.

But any organization that depends on contributions will realize immediately that Square means more than a simpler, cheaper way to take cards. It means a way to empower many people in the organization — field workers, street teams and door-to-door canvassers — to take credit cards on the spot.

“If it gets to the point where we can have a box full of these readers to pass around, give out to board members, etc., that has potential… to be really big,” said Clint Borgen, founder of The Borgen Project, a small non-profit that lobbies Congress on global poverty issues.

People are more likely to donate when they’re pitched in person, Borgen said — but many don’t even checks or cash anymore. Most organizations have to invest in a card reader — which can cost between $250 and $750 — or ask for a commitment and hope the potential donor follows up in order to accept credit card donations.

Processing cards with a reader has always been out of Borgen’s budget. Volunteers at the group’s last event used an inelegant but effective workaround – they wrote down credit card numbers and submitted the information later through the project’s web site, which uses Google Checkout. But Borgen recently signed up for Square and plans to use it with an iPad, which has a cheaper data plan than a phone and can display photos, videos and information to potential donors.

In theory, any volunteer with a smartphone could plug in a Square, log in through an app, and start taking donations, since it already works with ten phones as well as the iPad and iPod Touch. Square includes free hardware when customers set up accounts.

This lack of ceremony might make some donors hesitant to provide their numbers, but Borgen said the unusual-ness is actually a plus for his donor base.

“It’s very techie and gimmicky, it’s very conversational,” he said. “It’s been kind of neat in that sense — showing people how it works and engaging them with technology. It could be really effective in the early stages when it’s still kind of new and fresh. It lets you raise money without feeling like you’re hitting people up for money.”

Donors can watch a volunteer swipe a card, sign with a finger and get a receipt by email. Borgen has taken donations with the device and said it works well. The only drawback, he said, is that the company still seems to be in startup mode. The device was delayed past its scheduled release because of security issues, and the company was unresponsive when Borgen inquired about delays that turned out to be due to an error on his application. “[Square] doesn’t appear to have much customer service funding right now,” he said.

Square also doesn’t seem to be focused on the market for non-profits or political organizations yet, although some non-profits such as charity:water have used the device and Dorsey said some politicians have expressed interest. A representative for Square declined to be interviewed for this story, saying it’s “a bit too early” to discuss the usefulness for political and advocacy groups, although the company hopes to be able to talk about it “early next year.”