I've said it before and I'll say it again: the card infrastructure is too old. Unless Square plans to replace it from end to end, it won't be going very far and will likely end up as a large acquisition for Visa.
See http://www.quora.com/Aaron-Greenspan/Paying-With-Your-Phone-....
I have read your Quora post and I agree that the credit card system is antiquated, outdated and leaves a lot to be desired. I certainly feel this as credit card user and as a member of the startup community who knows the possibilities that are out there. I wrote the article considering the perspective that when Square started I was rather skeptical, it felt like a bit of a gimmick, yet their latest update suggests they are moving away from merely providing a piece of hardware that allows a merchant to accept credit cards and considering a more holistic system.
The new direction is at least interesting as the introduction of Card Case means they could the a customer's identity and credit card to their mobile phone and I can't see why down the road they couldn't use a variety of fund sources, i.e. not just credit cards.
I do think Square has a long, long way to go.
Where they started has given them some traction to date and I think that's because at this point in time, albeit antiquated, credit cards are well understood. In my opinion it's good to see Square adding extra features to their initial offering as I think it will need to in order to survive.
I compete with Square, so I'm admittedly biased, but I know something about this space.
We've built a full-featured POS system and API from scratch that runs in a web browser. "Full-featured" is an important descriptor because it means a lot of things:
- working with spring-loaded electronic cash drawers
- working with RS-232 serial line printers of various types
- handling nested products and product versions
- tracking hours for payroll
- working with all kinds of industries, not just coffee shops
- handling inventory
- integrating with accounting software (our own)
- handling business transactions
- working with existing legacy POS systems
Square doesn't do any of this right now. With enough money and resources it could eventually do some of it. However, there are competitors out there who can do more and who can do it for less money because they're not as tied to the existing infrastructure.
It's also somewhat amusing that we came out with FaceCash Register in March (Square Register?) and adopted "Pay with your face" as a motto ("Pay with your name?"). We made this image in 2010 (https://s.facecash.com/images/home1.jpg) and they posted this one last week (http://media.bestofmicro.com/square-card-case,S-T-293933-13....). Such is life in the Valley.
Anyway, maybe I'm wrong about all of this, but I don't think I am. I've bet a lot on it. Square is a really nice product, but as I've also said before, I think they just made the most beautiful eight-track player the world has ever known.
Aaron
As for your other points, I agree that they're essential features in a traditional POS system. My only experience with using a POS was at a local pizza shop in Ohio and we used all of those features on a daily basis. However, there's no reason we couldn't have went with a pure digital solution except for maybe receipts. Some customers just want that paper receipt. But I do agree that Square has a long way to go before it becomes capable of being such a system and there will be many businesses who just like doing things the "antiquated" way with a traditional POS. I think there is room for both in the business world.
New payment systems face a nearly insurmountable chicken-and-egg problem. By taking advantage of an existing infrastructure, one side of the equation is addressed neatly. The FaceCash thing is more reminiscent of PayByTouch (minus the fraud, I suppose) where you've got zero merchants, zero account holders and you're trying to push an unfamiliar and even awkward user experience.