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Author Topic: Square's new account-to-account transfer ("Gift Cards")  (Read 3016 times)
Stephen Gornick
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December 10, 2012, 06:21:37 AM
Last edit: December 10, 2012, 07:24:00 PM by Stephen Gornick
 #1

Square introduced "gift cards" (gift certificates) as a feature in their Square Wallet app:
 - https://squareup.com/wallet#gift-cards
 - http://vimeo.com/53634501
 - https://squareup.com/help/en-us/article/5080-sending-and-redeeming-gift-cards

This provides a method for a person to buy a gift certificate and pay for it using a credit card.  

The recipient of the gift certificate can then use the funds to make a purchase from the merchant chosen.

Essentially one way this is used is as an account-to-account (A2A) transfer:
 - http://en.bitcoin.it/wiki/A2A_Transfer_Methods

Why this is relevant to Bitcoin is because this provides a method for someone to sell bitcoins for a "gift card" through Square where the buyer can pay with a credit card.  Of course to protect from the risk of a chargeback, if the buyer is not trusted the seller will want to spend the gift card received before delivering the bitcoins.

The list of merchants who run Square register (available to anyone using an Android or iPhone on mobile or tablet) is about 250,000 in number:
[Edit - here's the directory:
 - http://squareup.com/directory ]

Many of these are coffee shops, cafes and similar types of small-business merchants, so this won't help really in facilitating $500 trades.  But someone wanting to trade $40 of bitcoins can probably find a place nearby they would dine at for dinner and now have a relatively easy way to cash out their coins.

The recipient of the gift card does not need to have a credit card or bank account associated with the Square account, and does not even need to use Square -- the gift card can be printed and the paper QR code taken to the merchant and used for payment.

This should be a fantastic tool useful for those wishing to do more over-the-counter (OTC) trading.

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December 10, 2012, 06:37:13 AM
 #2

No chargebacks ? 100% sure ?
We've heard this one before Smiley

But this is quite interesting.

Stephen Gornick
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December 10, 2012, 06:42:30 AM
 #3

No chargebacks ? 100% sure ?

Well, I receive the gift card via e-mail.  I have no Square account, I simply hit print.   I go to the restaurant that the card was for.  I eat.  I pay with the gift card (QR code).     I go home and send the bitcoins.

Then let's say the next day the chargeback happens.  

What do I care?

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December 10, 2012, 10:31:01 AM
 #4

The list of merchants who run Square register is about 250,000 in number -- though many of these are coffee shops and that type of small-business merchant.

Is there a complete list somewhere ?

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December 10, 2012, 07:08:03 PM
 #5

Is there a complete list somewhere ?

There is an interactive directory:
 - http://squareup.com/directory

Also, if you install the Square Wallet app, then it will show merchants near you from the directory, or use the map to pick a new location and see the merchants near that location.

 - https://play.google.com/store/apps/details?id=com.squareup.cardcase&hl=en  <-- Android / Google Play
 - https://itunes.apple.com/us/app/square-wallet/id455018546?mt=8  <-- iOS / App Store

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December 10, 2012, 08:57:42 PM
 #6

No chargebacks ? 100% sure ?

Well, I receive the gift card via e-mail.  I have no Square account, I simply hit print.   I go to the restaurant that the card was for.  I eat.  I pay with the gift card (QR code).     I go home and send the bitcoins.

Then let's say the next day the chargeback happens.  

What do I care?
Unless you're traveling, these are probably businesses in your community that will receive a chargeback. Being small businesses, they may actually remember you perhaps as "the one who's using Square gift cards".
Stephen Gornick
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December 10, 2012, 10:22:01 PM
 #7

Then let's say the next day the chargeback happens.  

What do I care?

Unless you're traveling, these are probably businesses in your community that will receive a chargeback. Being small businesses, they may actually remember you perhaps as "the one who's using Square gift cards".

Of course if the merchant were to alert me to there having been a problem with the transaction I would no longer do trade with the person who bought the bitcoins from me and I might even try to contact that party to try to help resolve the payment issue, but I can't imagine any way that it would become my financial obligation.

But since these gift cards can only be paid for and sent using the Square Wallet mobile app (which requires location tracking and a credit card on file), Square has a much greater control for fraud-prevention than if the merchant were to accept credit card swiped at the point-of-sale.  (Caveat on that though -- the mobile location tracking is easily spoofed, from my understanding, if you know what you are doing).

The point is, this is like being able to print and trade gift cards to paper with no tracking.

This capability has never existed before.

I guess it helps to have a former U.S. Treasury Secretary on your board -- you get to push the boundaries a little further without fear.

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December 10, 2012, 11:41:16 PM
 #8

Wonder how many of these payment systems are being rushed out of the door due to bitcoin, could be a boom of them shortly followed by a security shitstorm.

Seems more than likely.

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December 11, 2012, 04:21:44 AM
 #9

followed by a security shitstorm.

All the concerns about having a Bitcoin private key QR code exposed are kind of the same concerns someone printing out a Square gift card would have.   

So let's say I receive a $100 Square gift card to a grocery that uses Square Register.  So I print it out and go to the store and charge $15.

Then the next time I visit I scan it and it says $0 balance remaining.    Who suffers the loss?

I would suspect that Square would tell me I'm out of luck.    There is a difference in that the grocery would be able to tell where and when the remaining amount was spent. 

But it likely won't take long for thieves to probe the system and figure out how to take advantage of these weaknesses.

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davout
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December 11, 2012, 07:04:30 AM
 #10

Then let's say the next day the chargeback happens.  

What do I care?

Of course if the merchant were to alert me to there having been a problem with the transaction I would no longer do trade with the person who bought the bitcoins from me and I might even try to contact that party to try to help resolve the payment issue, but I can't imagine any way that it would become my financial obligation.

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