Square embraces credit card encryption

Mobile payments firm Square plans to make all of its credit card readers encrypt data.  The move is likely in response to claims from competitor Verifone that the company doesn't encrypt credit card data.  

Amid allegations from rival Verifone that Square is unsafe, Square will begin encrypting credit card data.

VeriFone, which makes a competing credit card reader, wrote an open letter to consumers and the industry a few months ago warning users of a security hole in Square's hardware. Square denied the allegations; however, the company also recently received a strategy investment from credit card firm Visa, which yesterday released best practices guidelines that included encryption.

The brainchild of Twitter co-founder Jack Dorsey, Square enables users to accept credit and debit card purchases anywhere and anytime via iPhone, iPad or Android smartphone. Sellers input the transaction total, swipe the consumer's card through a small dongle that plugs into the device's audio input jack, and Square handles the remainder of the transaction, claiming a flat 2.75 percent fee.

Square first launched in late 2009, and currently processes more than $1 million in transactions each day--in addition, more than 100,000 merchants nationwide sign up with Square each month. The Square reader now for sale via the Apple Store is priced at $9.95 per unit, although all accounts receive $10 instantly upon activation.

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