As companies like Square and Google (NSDQ: GOOG) pitch themselves as the future of payment processing, they’ll need to remove as many obstacles as possible for businesses wondering why they should fix something that isn’t broken. Square took a step toward removing one of those barriers Monday, dropping a limit on how much money it would send to a new user of its service after a day of Square transactions.
A Square representative said that businesses which use Square’s mobile credit-card processing system will now be able to receive all the money swiped (or received) during a single day by the following business day, ending a policy in which Square limited the distribution of that money to $1,000 a day for new businesses that hadn’t gone through an additional verification process. Square makes a credit-card reader that can plug into an iOS or Android device and allow businesses to accept credit-card payments without having to invest in more complicated point-of-sale technology.
Avoiding fraud has been a big priority for Square, the brainchild of Twitter co-founder Jack Dorsey. Hence the limit: Square wanted to avoid getting struck with fraudulent charges from a new business that sprang up overnight before it could verify the authenticity of the merchant. But a company representative said that now that Square is processing payments at a rate of around $2 billion a year, it has amassed enough data to feel more confident about its fraud-detection technology. That will allow companies that do more than $1,000 in business a day to get paid right away instead of waiting anywhere from days to weeks or having to go through the verification process.
Square is definitely on a growth track, having raised an additional $100 million in funding in June as well as backing from payment-processing giant Visa. But mobile payments is drawing interest from all directions, with many companies backing a different type of payment-processing system based on wireless NFC (near-field communications) technology that would bypass the physical credit card.