Just to add some context, this is a not unexpected consequence of Square's approach, which in many ways parallels what Paypal did in the ecommerce space.
Prior to Square the individual / very small business market was underserved (for real-world transactions). You had to go through a PITA application and due diligence process with a processor. And you typically had to pay significant up-front costs and ongoing fees to maintain your account.
There's a reason for that: the processor is financially liable for any fraudulent merchant charges. If a merchant signs up and puts through $10K of fraudulent charges and skips town with the money, it's the processor that pays.
So Square did two things. First it lowered the upfront costs by piggybacking mobile devices to turn them into low-cost swipers.
But the second very crucial thing they did is hidden on the back-end: they streamlined the signup process and support costs. They did that by doing exactly what you see here, using alternative ID and credit check methods. And making their customer support largely a self-service operation.
The good news is that the particular case you see here is probably fixable with continued improvement. But that's why it happened.. they are replacing an otherwise more costly and burdensome signup process with something largely automated. And there's a lot of money at stake if they screw it up and let fraudsters on board.
Prior to Square the individual / very small business market was underserved (for real-world transactions). You had to go through a PITA application and due diligence process with a processor. And you typically had to pay significant up-front costs and ongoing fees to maintain your account.
There's a reason for that: the processor is financially liable for any fraudulent merchant charges. If a merchant signs up and puts through $10K of fraudulent charges and skips town with the money, it's the processor that pays.
So Square did two things. First it lowered the upfront costs by piggybacking mobile devices to turn them into low-cost swipers.
But the second very crucial thing they did is hidden on the back-end: they streamlined the signup process and support costs. They did that by doing exactly what you see here, using alternative ID and credit check methods. And making their customer support largely a self-service operation.
The good news is that the particular case you see here is probably fixable with continued improvement. But that's why it happened.. they are replacing an otherwise more costly and burdensome signup process with something largely automated. And there's a lot of money at stake if they screw it up and let fraudsters on board.