Square's problem is that the margin on processing physical credit cards is razor thin, especially if you are just using other people's networks. My thought has been that Square will eventually launch its own credit card network once they have a large enough share of the credit card processing market.
Square could have launched an API and done what Stripe did, but the problem of processing credit cards over the Internet are different from the problem of processing physical credit cards. I don't think that anyone could have simultaneously succeeded at both.
The idea of Square doing tang seems similar to the idea of imo.im getting people to use their own IM network in preference to the popular third party ones they already support.
It might be doable but there would need to be a hook for cardholders, like cash back, loyalty points, analytics etc.
[0] https://groups.google.com/forum/#!topic/square-client-api/c0...
[1] https://groups.google.com/forum/#!topic/square-client-api/7x...
Square's current magstripe reader is very simple, and thus cheap to produce to the point where they can give it away. EMV readers are not cheap. They must be certified, and are far more complex. I was in an Apple Store in London a few days ago and they were selling PayPal branded EMV readers for about $150.
Even if we assume a very healthy markup on that price, given the margins Square is on they cannot afford to give away a reader that would cost them ~$50 to produce. It changes their entire business model. Square have offered no indication of how they plan to support EMV cards once they become widespread in the US (which will eventually happen), other than 'you can still swipe the magstripe', which whilst true also usually means the fraud liability remains with the retailer, rather than the bank.
However, I then spoke to an ex-Square employee, one of the very early members of the team, and he told me that they weren't concerned at all about it, they had much bigger plans. I was skeptical, but I think Square Cash might be one of the elements of this bigger plan.
[0] http://techcrunch.com/2014/01/22/with-an-eye-to-internationa...
http://techcrunch.com/2014/01/13/putting-squares-5b-valuatio...
https://twitter.com/pmarca/status/457017580385873921
Square's valuation was based on common stock.
Stripe came in and absolutely crushed them.
Square deserves it. They had huge first-mover advantage and massive popularity early. I will do mid six figures through Stripe in the next 12 months and all of it - 100% of it - could have gone through Square had they simply spent a few weeks exposing and documenting an API.
Embarrassing.