Will Square Be the VISA of the 21st Century?
While startup Square is not in the business of making credit cards as VISA was when it started in 1970, there is a potentially interesting link behind the intentions and possibilities of the two companies at the time of their respective foundings, even though they are separated by 40 years of business and financial change, not to mention lightyears of technology evolution.
When Dee Hock started VISA, he had hopes that he could create an organization that reflected elements of both chaos and order (what he dubbed “chaordic”), as well as competition and cooperation. At some level, a chaordic organization would be “self-governing,” reflecting more the principles of evolution and nature than those of flawed 17 Century financial institutions and hundred year old oligopolies. Hock wanted to challenge what many held as fundamental truths about the nature and relationship between money, organizations and the human spirit. He wanted to use technology and chaordic beliefs to challenge the form (e.g. physical objects of bank and tellers with endless bureaucracy), and rethink the essential function and value that financial transactions should deliver.
“Could this be an opportunity to reconceive, in the most fundamental sense, the very ideas of bank, money and credit card – even beyond that, to the essential elements of each and how they might change in a microelectronic environment?”
- Dee Hock, in 1999’s “Birth of the Chaordic Age” page 117
So while in the end, VISA did not achieve Hock’s highest chaordic hopes, might Square take up the mantle and become the transcendental organization that finds new ways to link together diverse financial institutions and individuals (retailers and customers), some of whom might have had access to the prior financial structure, but many more were denied access? Might there be a unique business to be built on the transformation of the concept of money from physical object to that of “guaranteed data” that provides equivalent value and a fluid (mobile) medium of exchange for all, regardless of size of the entity?
In the US today, the credit card revolution started by VISA in 1970 has become a reality in which 90% of US consumers use some form of credit, debit or prepaid card. And what are these cards about? Don’t think of them as simple ‘credit cards.” More broadly, they are physical symbols of the ability of buyers and sellers to safely exchange value (goods and services) with a level of guaranteed security in the transfer of the data.
That’s what Hock hoped for in the 1970’s – to be in the universal monetary exchange business via cards, not in the credit card business. While today the system that surrounds the cards is one where it is easy to pay, there is still considerable friction in receiving and accepting the payment.
Hence the opportunity for Square to go beyond the reality of VISA. And the challenge it has is to define and execute on the nature of a new organization that is chaordic, at least in part, by the nature of the “immediacy, approachability and transparency” mantra of its technology backbone.
“(We want to) enable individuals and small businesses to accept electronic payments by turning any device with an audio-input jack—such as a computer or a mobile phone—into a credit-card terminal.” – Jack Dorsey, Square founder at Le Web 09 (video)
“I can buy an iPod touch] for $200, get the app and I’m in business. I don’t need a contract with AT&T or anything. I’m in business.” – Jack Dorsey in The Economist
“The startup hopes to make it big by allowing virtually anyone to accept credit card payments by connecting a simple reader to a mobile device. Dorsey, Square's CEO, envisions the technology being used by small businesses, street vendors, and even individuals who want to sell a couch on Craigslist or collect money from a friend … pricing will allow for different levels of customer involvement. Someone who wants to use the service once for a yard sale should be able to get started easily and cheaply, while a small business might upgrade to a more full-featured version of Square” – MIT Technology Review
So is what Square will create in partnership with its ecosystem, the premiere system for immediate and secure value exchange regardless of the size and location of seller or buyer? And in doing so with “real-time” technology, will it make the relationship between “Man and Money” a bit more immediately … human?
(Video demos of Square can be found here starting at 9:00 minutes in, and here staring at 1:40 in.)