Before Square, the mobile Point of Sale (POS) payment company that Jack Dorsey of Twitter founded in 2010, the word dongle was a lesser-known term for a piece of hardware that plugged into a computer.
Yesterday, however, with PayPal announcing their new mobile payment service, and entry into Square’s hundred-billion-dollar mobile payment industry, the word dongle will be much more common vocabulary.
PayPal’s new dongles will directly compete with the mobile payment industry that Square pioneered, which is expected to top $200 billion by 2015, according to research by the independent research firm Aite Group.
The largest market for these mobile payment services is with small business owners, many of which do not currently accept credit cards. Companies like Square and PayPal offer an affordable option for small businesses to accept credit cards.
PayPal’s service, however, will charge a fee of 2.7 percent, to Square’s 2.75 percent.
Other competitors to Square and PayPal include Intuit’s GoPayment, a company that offers a similar mobile payment model: their free dongle supports pay per transaction, with a fee of 2.7 percent.
A Chicago-based company, Cashier Live, has taken a different approach in an attempt to appeal to small business owners. For around $500, vendors can purchase a Cashier Live scanner and card reader dongle that attaches around a phone instead of to the top, like Square, PayPal and Intuit.
While slightly more cumbersome, vendors have the added feature of a scanner with Cashier Live, unlike other mobile payment services.
Square, however, is continuing to innovate. Earlier this month Square announced it will be rolling out a new payment system with 30 NYC taxi cabs. The current LCD touchscreen and card reader in those cabs will be replaced with an iPad and Square card reader.
Although Square is well established as the pioneering disruptive company of the mobile payment industry, newcomers like PayPal have moved into the industry for a piece of the large market.
As for small business owners, each payment system will offer certain advantages. The ability to accept credit cards in general, is attractive to any small business.
As the industry continues to grow, we’ll all become more accustomed to our new vocabulary: dongle.