The End of Cash?

Last week, Twitter Chairman and Co-Founder Jack Dorsey was on CNBC describing his latest project: Square.

Basically, Square is device-enabled service that uses an electronic "square" that is plugged into the bottom of a iPhone, enabling payment transactions through a card swipe. The customer then signs his/her name with a finger and gets an email receipt. The business model involves receiving a percentage of all transactions, and Square, which is a Khosla Venture, has already signed up the major credit card companies.

Other interesting hooks include a point system, which allows cardholders to collect rewards points (just like credit cards), as well as the ability for retailers to identify repeat customers. And for those who are a little more socially-conscious, Square allows the cardholder to donate 1 penny of each transaction to the charity of his or her choice.

Like many other companies, Square is another example of the continued evolution of online services evolving into mobile services. Imagine Paypal...without a computer!

There are many arguments on both sides regarding the end of cash as we know it. Certainly, the aggregate value of transactions that involve cash has decreased with credit cards, debits cards, and online transfers. But some would argue that there is always a need for cash, esp. in emerging economies.

I would argue that all large scale transactions have already gone away from cash, and the only value of cash is for micro-payments (tips, taxis, parking meters). But even these types of transactions have become more electronic in recent years, and with technologies like Square, we may be seeing the end of cash, save for the many "underground economy" transactions.

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P.S. Sorry, that it's been a little while since I posted...it's just been a really busy month!