Friday, August 24, 2012
TNW quoted Square spokesman Aaron Zamost as saying, "The issue was quickly recognized by our engineering team and has been fixed. We're sorry for any inconvenience this may have caused and we're taking the appropriate steps to ensure it doesn't happen again."
TNW provided a link to Hacker News, a startup and technology news site hosted by venture capital firm Y Combinator, which posted comments from users who reported that the Square website was not functioning (news.ycombinator.com/item?id=4416030 ).
At the time of this writing, Square had not responded for a request to comment on the reported outage. And Square's customer support feed on Twitter – the social media site created by Square founder and Chief Executive Officer Jack Dorsey – could not be scrolled back to the night of Aug. 22 due to an apparent overcapacity issue on the site.
Rick Berry, CEO at Los Angeles-based mobile payment processor ABC Mobile Pay Inc., took a cautious approach to Square's service outage. "I would encourage us to give Square the benefit of the doubt," he said. "Mistakes do happen."
However, the apparent glitch may be an indication that Square is not equipped to handle the volume of payments that service providers routinely process. "I would have to say and kindly suggest that this is indicative of a solution that isn't specifically designed or tailored to the SMB [small to midsize businesses] marketplace," Berry said. "It's a person-to-person solution."
Berry added Square does not have the features and functionality needed by SMBs with payment volumes of over $10,000 per month. It is thus Berry's opinion that Square's market is relegated to the 27 million micro-businesses that do not currently accept electronic payments.
Berry, an eight-year veteran of the payments industry, is keenly aware of what can go wrong when processing payments. He said ABC experienced a merchant identification problem that erroneously transferred hundreds of thousands of dollars from one merchant account to another. While the issue was rectified, it was embarrassing for ABC. "That kind of thing happens and that's why I prefer to be understanding [of Square]," he said.
But he added that for ABC's gateway to be rendered inoperative for an hour would be an "extraordinary" event. "That's an inordinate amount of time to be completely down and out and not being able to operate," he said.
Square's outage exemplifies how establishing a new niche in the payments space is not easily accomplished, according to Berry. "In the mobile landscape particularly, it's not something you can come in and just all of a sudden be an expert and start selling successfully," he said. "There are a lot of technical realities that you need to be aware of – and challenges. It takes a real effort to become truly knowledgeable and understand the different ramifications. And then you can still be taken by surprise."
Berry expects Square will face further difficulties. "They more than likely [will] experience other challenges or disruptions in service because their infrastructure, in my opinion, wasn't designed for a business," he said.
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