Squaring Off Over Mobile Payments: Verifone Delivers Low Blow to Square
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9 March 2011Jacob Jegher
It's no secret that the mobile payments space is heating up and there is no question that security concerns are popping up. Today, Verifone took aim at Square over security concerns with its reader. Verifone's CEO published an "open letter to the industry" at http://www.sq-skim.com. Here are a few excerpts:
"The issue is that Square's hardware is poorly constructed and lacks all ability to encrypt consumers' data, creating a window for criminals to turn the device into a skimming machine in a matter of minutes.""Consumers who hand over their plastic to merchants using Square devices are unwittingly putting themselves in danger." "Don't take our word for it. See for yourself by downloading the sample skimming application and viewing a video of this type of fraud in action." "We call on Square to do the responsible thing and recall these card skimming devices from the market."I have no doubt that the Square reader or any other reader for that matter can be compromised. That is a SERIOUS concern and Square's lack of encryption needs to be addressed immediately. The security is only as good as those who created it. Since it has been created by a person it can be bypassed by an even savvier person. In fact, if a fraudster wanted to steal credit card info they don't even have to resort to fancy technology - they could use carbon paper, take a picture of the card, write down the details, etc. The big question here is whether or not security should be actively used as a competitive differentiator. I'm a believer in collaborating to defeat fraudsters. Verifone is effectively enabling fraudsters by handing off instructions to them. IF Verifone's offering is more secure, there are more appropriate ways to communicate this. I debated whether or not to embed Verifone's video in my blog entry simply because I don't want to promote it. However, I would like you to watch it and weigh in on if you think this is a productive competitive move for Verifone or a sad day in the war against fraudsters. Here is the video posted by Verifone.