Early this morning, VeriFone CEO Doug Bergeron wrote an “open letter” to the financial industry. In it, he decries Square and their little smartphone-credit-card-reader-that-could, calling for its recall. His reasoning? The Square dongle is easily available and it handles data passed between the dongle and whatever device it’s plugged into without encryption (though everything transmitted over the network is heavily encrypted), making it too easy for criminals to “skim” (read: steal) credit card information. They even built a phony Square app to prove it.
Of course, the letter barely (and even then, indirectly) touches on the fact that VeriFone has their own, competing smartphone credit card reading system, giving them a bit more skin in the game than the whole white-knight approach might let on. Toss in the fact that these “flaws” are by no means exclusive to Square, and the whole thing reeks of mudslinging and desperation.
Here’s the thing: every single time you hand over your credit card to someone (be it someone using Square, or any one of the dozens of other credit card input methods) you’re trusting them not to steal it.
See my point? This is a flaw inherent to the entire industry.
Once a consumer realizes a business/individual can take credit card payments and they’ve been convinced to hand over their card, it’s game over. There are a million and one ways to steal that data, from high-tech black market skimming devices to a simple pad of paper. Bad guys will find ways to do bad things — and with just about every business using a different transaction solution, most folks wouldn’t question a thing.
Also, it’s probably worth noting: adding hardware encryption to a device like Square would increase the price of manufacturing dramatically. Increasing the price would inhibit Square’s ability to give ‘em away for free, thereby eliminating one of the service’s key selling points. (And even if Square DID do dongle-to-device encryption — what’s to keep baddies from building Square [or VeriFone PayWare, for that matter] hardware lookalikes that don’t?)
The “security flaw” here isn’t in Square, nor is it new. It’s in our credit card system, which is an aging network of semi-secure devices operated by people and businesses we trust on faith — Square just highlights that fact. You can’t build your house out of straw and then be mad at the wind when it blows it down.