Who Are Square’s Real Competition?
Filed under mCommerce, Uncategorized
ROAM Data is a Boston based technology company that has become the market leader in enabling mobile commerce (mCommerce) and mobile payments. While some in the industry compare ROAM to Square, that comparison is not apples to apples. Yes, both companies have a credit card reader that plugs into a phone’s headphone jack, but that is where the similarities end. The history, business model and technology of the two companies are all markedly different. ROAM is a technology and service provider that enables a variety of mCommerce applications for large and small merchants to transact with consumers in both face-to-face and remote purchasing. ROAM does not provide merchant accounts, i.e. it is not a Merchant Service Provider (MSP). Square is a MSP that competes with other MSPs for merchant accounts. It built a single card acceptance application and its own audio jack swiper technology. ROAM provides any MSP a turnkey card acceptance app with its patent pending audio jack swiper technology, but it is purely an arms dealer. The real war is between Square and other MSPs who use ROAM technologies to compete for merchants.
It is thus worthwhile to compare the technologies being used. To put it simply, Square technology is designed more for Peer-to-Peer payments, where any person can signup to use their service, the swiper is very cheap to make which sacrifices encryption and read rate, which is fine for low volume users. ROAM technology was designed for real merchants with real merchant accounts and higher transaction volumes. The reader is much more sophisticated, has full security encryption, more robust read rate, and can reach more mobile device types. It is more expensive to manufacture but still a fraction of the cost of traditional POS technology, it is state of the art in secure mobile POS solutions.
For a deeper dive, ROAM’s reader uses a patent pending technology to power the processor using sound waves to digitize and encrypt the card track data within the card reader before transmitting that encrypted data to the device, which ultimately gets decrypted only by the PCI certified payment server. On the other hand, Square’s card reader has neither power circuits nor processor to digitize and encrypt the swipe data, relying on the phone application to digitize and encrypt. This means the cardholder information is in the open for any other application to capture and is therefore vulnerable to skimmers to steal cardholder data. This method of capturing analog track data is also much more prone to read errors, and is not compatible with as many phones. ROAM’s reader is more robust due to its physical and electronic design, resulting in much higher read rate, and it works on many more devices, (including all iOS, dozens of different Android phones and tablets, most BlackBerry devices, as well as PC’s and Netbooks). ROAM Data won the industry’s 2010 Technology Innovation Award at the Electronic Transaction Association’s Annual Meeting. Square’s reader design works on a smaller number of devices and is at the heart of the IP issue they are facing.
Beyond hardware, there are other differences in technology and business model, Square delivers an application as an MSP, ROAM delivers a platform and mobile service. ROAM has built a device agnostic mobile commerce platform that can enable all sorts of applications, from card acceptance to order entry to mobile shopping, mobile offers, and mobile remittance. ROAM owns granted and pending patents, along with rights and exclusive rights to related IP on mobile reader solutions and mCommerce platforms. Some of the largest payment companies like Intuit, Sage, North American Bankcard, First Data, Chase Paymentech, Total Merchant Services are now leveraging ROAM technology to service their merchants.
The two companies’ founders also come from different backgrounds and pedigrees, but they do have something in common. Square’s founder Jack Dorcey, who co-founded the enormously successful Twitter, teamed with long time friend and glasswork entrepreneur Jim McKelvey in 2009 to start Square. ROAM founder Will Graylin started 3 other high-tech companies (one security software company was sold to BEA, now part of Oracle, another was the first pocket size mobile POS company sold to Verifone). After earning two masters degrees from MIT, he teamed with co-founder and premier mobile architect Dr. Michael Arner, to start their first mobile software company in 1999, they later started ROAM Data in 2005. Graylin and Arner have been innovating in the mobile and payment industry for 12 years. These 4 entrepreneurs do have one thing in common; they all want to reduce the friction in commerce.
To sum it up, ROAM is not competing with Square for merchants, and is very different than Square. It is the leading technology supplier for mCommerce solutions. How Square will do against the other MSPs in the long run remains to be seen, the good news is the battle to capture this new segment of merchants previously underserved will result in better solutions for merchants and more convenience for consumers.
To learn more about ROAM Data or to see a live demo, please contact Rob Stringer at rstringer@roamdata.com
Share This
Feb 16
- Christina
- tonua williams
- Ian Smith
- Krissy
- cmiller