PayPal vs Square Are Bumping & Beaming Money Via iPhones

Whether you've been a loyal PayPal user for the last 10+ years or are willing to put your trust in the hands of one of the Twitter co-founders, you may be one of the early pioneers to use iPhones as the new form of currency. Bumping and beaming financial transactions via smartphones may be the missing link to a time when there will no longer be a need for actual money to exchange hands.

Bumping by PayPal

This month, PayPal will push the limits of e-commerce a little further with the launch of its Send Money iPhone app. Its latest version of its iPhone application allows users to transfer money by "bumping" two iPhones together.

The Bump feature in Version 2.0 of the Send Money app can move funds quickly between PayPal accounts by simply putting two iPhones together. The new application also includes a split check feature that lets users divide and quickly reimburse each other for the cost of a meal or a cab ride, including tax and tip, for up to 20 people.


With the new app, comes security. Personal and financial information is never stored on the device itself, so dissimilar to cash or a credit card, it can't be stolen. In the case of losing one's iPhone, one doesn't have this additional worry.

The free app can purchased and downloaded at Apple's iTunes Store.

Beaming by Square

Jack DorseyJack Dorsey entered the mobile payment service field at the end of last year. and of course he was the first to announce his new company by tweet on December 1, 2009.


Payments using the Square payment service are relatively easy. For merchants that accept mobile credit card payments, they simply attach a Square dongle (see image below) to their smartphone by inserting the tip into the phone’s audio jack. Once the 'free' dongle device is affixed to the phone, merchants can accept credit card payments by just having their customers swipe their credit cards through the external portion of the dongle.


Square has not released rate sheets yet, but according to the Square website there are “no contracts, monthly fees, or hidden costs”. Square also donates 1 cent of every transaction to the charity of the buyers choosing.

Square vs. PayPal

There is nothing quite like Square in the market just yet, although PayPal comes close. PayPal also attaches credit cards to PayPal accounts where they offer several different ways to make payments - including payments via SMS text message and emails. However, the major advantage to using Square’s mobile payment service is that the customer is not required to register for anything. With the Square system, all one needs is their credit card to make a payment. With PalPay, users can only make transactions when both parties have PayPal accounts.


Some of the additional features of the Square mobile payment service that is not included with the PayPal model include the following:

• Text and email receipts
• 1 cent charitable contribution for every transaction
• Photo verification
• Rewards program management (i.e. “Buy 9 coffees get the 10th free” without having to worry about loyalty cards)
• Lightweight and ultra portable credit card swiping dongle

Since digital wallets are new territory for both the consumer and the business owner, there is a leap of faith in making these types of transactions. Concerns about financial transfer of funds of this type are similar to the skepticism many of us had when we first purchased on the Internet over a decade ago. The early adopters will blaze the trail for many of us, before mainstream acceptance kicks in.

I am interested to know if any consumers or merchants are currently accepting PayPal or Square payment services? Please feel free to leave your comments below as to your likes and dislikes with either or both of these new systems.