Square has grown dramatically since its prior round of funding, now processing over $500 million of merchant transactions a month,” PrivCo said in its report.
Bitcoin needs to take a slice of that market.
Take a room with a hundred typical people. How many in that room have a bitcoin wallet, perhaps as an app on their mobile and then compare that to how many have a credit card that can be swiped.
Every one that does have a card (which is pretty close to everyone in the room, especially since prepaid cards count as well) can make a purchase where a Square register is used, so that makes the merchant's investment in hardware and the expense to change the point-of-sale process be something that can be justified on a per-transaction basis when considering all the transactions that will occur.
Currently, most credit card transactions at retailers occur using dedicated point of sale system or card swipe terminal. Fortunately, Square register is causing standard iPads to be introduced as a replacement for the legacy systems. Bitcoin can more easily expand as a payment method accepted by merchants who are already using Square register because the same hardware -- an iPad, can also be used for Bitcoin transactions.
The problem for now is that Apple has evicted all Bitcoin wallet apps from the App Store. Web-based EWallets, like Blockchain.info/wallet will still serve the purpose, but it is a crude workaround compared to the improved user experience a mobile app can provide. But bitcoin doesn't need to have its own point of sale. The free Square register app has a method to accept cash payments, so non-credit card payments are already supported. Bitcoin purchases could be treated, as far as Square register is concerned, as cash payments (though a manual end-of-shift or daily reconcile would need to occur).
I gave an example of this dual use of the Square register app here:
Since Bitcoin won't be receiving a couple hundred million in VC financing to build things like Square register, and has no mobile design team or marketing budget, if Bitcoin becomes a better competitor against Square it will be in the category of person-to-person transactions. The differences against square include Square's 2.75% fee, the delay in access to funds from the charges made through Square, the restrictions as far as what type of transactions Square allows, etc.
There are so many competitors in the payments space that there will be features that will translate well to Bitcoin (such as Square's able to passively approve payments based on location reported by its mobile-aware app.) It may cost millions to design, develop and deploy a solution, but the cost to copy the successes are trivial in comparison.
And there is much of the world where Square's approach will never be useful, especially for its mobile-to-mobile payments strategy. Where much of the world still uses feature phones (even for a large demographic in Square's own target market), there is room for other solutions. Coinapult's SMS wallet might be getting reworked to be available globally (or some other SMS Wallet proivider might arise and offer the same), That will have a much greater transaction volume potential for Bitcoin than a head-to-head competition against Square ever will.