San Francisco-based mobile point-of-sale (mPOS) solution provider Square has announced that merchants will now be able to sell goods and services for bitcoin via its Square Market.
Introduced in June 2013, the Square Market is an online website that features Square retailers in a centralized location not unlike eBay or Etsy. Square Merchants are not charged for listing items on the marketplace, but pay 2.75% for each sale for payments made with traditional payment options.
Wrote the company on its official blog:
The news is especially significant as Square is expected to pass $1bn in total sales in 2014, and was most recently valued at $5bn.
Founded in 2009, Square has quickly become the dominant player in the burgeoning mPOS sector due to the popularity of its Square Credit Card Reader with small merchants. As of 2013, Square was processing an estimated $20bn in annual payment volume.
Despite Square's impressive performance, however, some commentators have alleged that Square merely offers a stopgap technology that will be eventually replaced by the prevailing mobile payment option of the future, making its interest in bitcoin potentially telling.
How it works
In a company blog post, Square Market lead Ajit Varma indicated that buyers who select the 'Pay with Bitcoin' option at checkout will:
- Generate a new bitcoin address
- Enter an email address to receive order details and receipt
- Submit the bitcoin payment within 10 minutes, or the order will expire
- Confirm payment to the network (buyers with a mobile wallet simply open and scan the QR code, while hosted wallet users will receive instructions for entering the information)
- Have the payment validated by Square, which will detect that its receiving address was funded
- Advance to the confirmation page.
During this time, Square will continually monitor the checkout process to ensure that it knows when the payment is received.
Said Varma about the process:
Merchants will receive the full amount of the purchase in dollars, minus Square's fee. Square didn't specify exactly what the fee is, but presumably it is the standard 2.75%.
The company also stressed it will not be offering an option to purchase bitcoin.
Should a customer require a refund, Square says it will refund in whatever currency was used for the purchase.
Given Square's leadership position in the mobile payments industry the new feature will likely be seen as yet another validation for bitcoin as an emerging payment mechanism.
Square follows fellow payments tech startup Stripe to become the latest payment facilitator to begin experimenting with bitcoin, and given the recent uptick in announcements, it's likely that these thought leaders in the space could encourage more to follow suit.
Of course, as with any new announcement, Square provided only a big-picture version of how it will look to enable its merchants to accept bitcoin.
For example it is not yet known how Square will be managing the risk of providing zero-confirmation transactions.
CoinDesk has reached out to Square for further comment.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.