iCharge – Jack Dorsey gets some Euro heat

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[Germany/UK] It didn’t take long. Square, the iPhone credit card transaction startup co-founded by Twitter’s Jack Dorsey, already has a European competitor.

Like Square, Berlin and London-based iCharge wants to democratise the ability to accept credit card payments in person through an add-on device for smartphones and the startup’s accompanying application and service that taps into established payment gateways. The result is that any sized retailer – from someone self-employed, an independent shop owner or small trader – can take payment by credit card using just an iPhone or handset running Google’s Android.

It’s practically an identical pitch to Square, although iCharge looks to be slightly further behind. The self-funded company, founded by “experienced serial entrepreneurs and experts from the credit card industry” sometime in 2009, will run a limited trial with select retailers this summer. A wider launch isn’t scheduled until the third quarter of 2010. Square on the other hand is currently in private beta and plans to launch in early 2010.

The begin using iCharge, merchants will need to purchase the smartphone-compatible card reader and register with the iCharge service. Credit cards can then be swiped and the card info is sent to the connected iPhone/Android application.

Next, and this bit has me slightly puzzled, the buyer signs directly on the smartphone touch screen to approve the transaction. That’s slightly odd but may work out fine in practice, since the iPhone and most Android phones employ capacitive screen technology and don’t come with or support the use of a stylus. Users will therefore need to sign with their finger unless the iCharge comes with a special capacitive supported ‘pen’ of sorts.

The credit card data and signature is then sent encrypted to the iCharge payment gateway, no sensitive info is stored on the phone itself, after which the buyer can optionally receive a receipt via email or SMS and may additionally track all transactions on the iCharge website.

Again, very Square-esque.

A big part of iCharge’s pitch inevitably centers around security. All data transfers utilise SSL encryption, and credit card numbers are checked against a database of known stolen credit cards. And in the future, iCharge says it will integrate further safety features, such as “buyer name and image verification via social networks, as well as storing the GPS location where the transaction took place”, thus providing more protection for the retailer.

But who’s going to protect buyers?

All of this democratising credit card processing technology may seem great but consider this: put a fake Square or iCharge device in the hands of a rogue trader, and a card reader attached to a phone running the ‘open’ Android OS seems like a fool-proof way to clone somebody’s credit card.

Just a thought.

  • http://www.thestartup.eu Stefano Bernardi

    The gadget itself is way better looking than square, only thing is I guess it’s device-specific (guessing from the pics) while one “square” can work on any device..

    • Leah Tudor

      It’s nice to see Mr.Dorsey innovating something new again.. Surprisingly it’s far more different than his “twitter” inspired work. Squareup is something that should have been done years ago, finally its on the way for a skyrocketing release.

      As you can see, competition is rising up. See the detailed square-up review: http://bit.ly/squareup-by-jack-dorsey-best-or-worst

  • http://www.rucontent.ru peter tatischev

    something similar is coming from Oxford too…
    didn’t quite get the details of that though
    http://www.isis-innovation.com/news/news/IsisTechnologytoReplaceCheques.html

  • J

    I want more info on square – I feel like the previous techcrunch articles haven’t gone into enough detail. There are a couple iPhone apps that allow cc transactions right now, and this technology seems available (walk into an apple store, all employees are checking out customers with their quasi-iphones)

    Dorsey is a smart dude, abstracting the nightmare of merchant accounts, etc, etc sounds about right, but I’m not sure that’s exactly what they are doing. It’s not super clear, granted my visibility has only been techcrunch articles.

    Also, if this is what they are doing , some european company copying them on the other side of the pond is not a threat, more of a justification that its a good idea. Getting merchants around the US to engage the iPhone for all their sales is a big enough challenge, I doubt these guys are sweating some euro copycat.

  • Jon

    Re: the comment about the stylus – Er Steve, are you aware that in Europe no-one uses signatures to pay, so the screen is probably for entering your PIN number.

    The trouble with this is that while the company may be based in Europe, there’s no way it could take off in the UK, so they must be aiming it at the USA or other countries with old-fashioned payment infrastructures.

    In the UK, and much of Europe, in the UK you can’t pay for things with a signature or by swiping – instead we have the far better chip and PIN tech.

    Square would be DOA outside the USA because of this, and iCharge will follow suit unless instead of swipe and signature, the reader is actually for the card’s chip, and the screen element is for entering the PIN -that could work, but the screenshots imply otherwise.

    • Steve O'Hear

      Of course I’d considered chip n pin although I didn’t know it was Europe-wide yet or compulsory. I certainly know that in the states signatures are still pervasive.

      So I did consider chip n pin but the press material makes mention of signatures or signing.

      Maybe they’ll come back and explain…

      • Jon

        It is strange they don’t mention it, especially for a European company. Banking fraud regulations mean chip and PIN is compulsory in the UK, though I think in France and Germany you can still choose which system to pay with.

        I have an old British credit card that never works in the USA as the magnet strip lost it’s information years ago, but is always fine in the UK because the chip works fine and it never needs to get swiped.

        The only time swiping is used in Britain is for foreign cards (so tourists need not worry about not having a PIN), but signatures are still occasionally used if you get your PIN wrong. The transaction will complete, but it flags you up with the bank as a potential fraudster and you’ll get a call from the bank to check it really was you.

        Looking at the photo again, I think that is a PIN entering screen, and the device looks like it just might be big enough to put the chip end of a card into – so despite the press release making no mention of it, it could be that this is the first device to to allow both formats, one for countries that use swiping, the other that use PINs.

        if that’s the case then it definitely could be a game changer if the banks allowed it.

      • Steve O'Hear

        From the iCharge website:

        “The unique combination of our iCharge magnetic strip reader and mobile application allows you to accept credit card payments securely from anywhere using your mobile phone.”

        Magnetic strip.

      • http://www.twitter.com/aainslie Alexander Ainslie @AAinslie

        This is an interesting read:

        “We think this is one of the biggest flaws that we’ve uncovered – that has ever been uncovered – against payment systems, and I’ve been in this business for 25 years,” Professor Ross Anderson from the Cambridge University Computer Laboratory said.

        “This is a flaw in a system that’s used by hundreds of millions of people, by tens of thousands of banks by millions of merchants,” he added.

        In essence the Cambridge researchers have discovered a way to carry out transactions without needing to know a card’s pin number.

        Article: New flaws in chip and pin system revealed
        http://www.bbc.co.uk/blogs/newsnight/susanwatts/2010/02/new_flaws_in_chip_and_pin_syst.html

    • Daf

      What about the contactless payment technology as well. I’ve noticed that most of my new cards I’ve received over the past couple of years have this tech on them now, and a lot more retailers are also supporting it.

  • http://www.SpeedSell.com George Bevis

    Banks worry about use of handsets for authentication. It’s too easy for a trojan on the handset to capture your signature or PIN and send it to a third party. I’m surprised that iCharge has found a bank who will support these payments – but pleased if they have because someone needs to make innovation happen in this space. I suspect innovation here needs to be led by MasterCard / Visa, otherwise they’re unlikely to agree that the process is secure (and it can’t function without their signoff). This will be fascinating to follow – good luck to iCharge.

  • venkat

    Is it just me that I don’t see “Buzz it” button when I click on Read More but I could wile on the homepage for all posts??

  • http://www.twitter.com/aainslie Alexander Ainslie @AAinslie

    The iPodTouch Card Reader/POS system used in $APPL stores is from http://bit.ly/GlobalBay & I believe this is a video of @Jack testing GlobayBay’s reader with @Square’s application http://bit.ly/GlobalBay_Square

    http://www.twitter.com/aainslie

  • Steve

    I would like something similar, but only if it were chip and pin enabled. Signing off purchases isn’t done in the UK any more, but having a simple platform like Square or iCharge would be perfect for those times when you need to accept cash from friends or sell a one-time item.

    The iPhone is as wide as a credit card, so surely an attachment could be made, with the user entering their pin on screen?

  • http://www.myspace.com/drunkonvinyl jake levine

    they’ll just need to give this out for signatures:

    http://asia.cnet.com/crave/2010/02/11/korea-s-sausage-stylus-really-works/

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  • http://synaptify.com Dominiek ter Heide

    Cool, I had an idea along these lines last week: http://www.slideshare.net/dominiekth/guilder

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