The initial hype associated with Jack Dorsey’s Square appears to have waned. I’d like to add my 2c about how I think it can be game changing for the underbanked: to power millions of micro-merchants, to create wealth, to create an ecosystem of payments and credit services.

An iPhone cost $299 two years ago, then $199 when the 3G was announced last year and now you can pick one up for $99 (with a fat 2-year data plan, of course).  Soon it will be completely free and no longer limited to those with some means.  Every house cleaner, hotdog stand owner, and street merchant can get one, as long as they justify the data associated data costs.  With a revenue model they can.  Even with interchange fees at current (high) rates, there is overwhelming evidence that most small merchants justify the expense through more and greater sales.   This is a big universe of micro-entrepreneurs, even just in the US.  The card networks should be promoting the Square with full gusto.

Not just is there a large addressable market, but it’s going to change the lives of millions of people: these debit and credit transactions are going to be almost completely income generating for those at the bottom of the pyramid.  Those who think about poverty reduction, the so-called “asset building” community including the now popular micro-finance industry abroad, are always looking for ways to give poor people the opportunity to create appreciating assets, business chief amongst them.  Enter the Square.

Of course the Square can’t do it all on its own: we’ll need the right intermediaries and an ecosystem of apps to help leverage maximum value.  Could micro-finance players, like Grameen America or the Accions help reach new and future customers?  I think so.  We’ll need Quicken for the iPhone (I’m guessing there are already 100 apps along those lines).  We’ll need financing options.  We’ll need pseudo-bank products to make the electronic payments usable: prepaid cards.  We could offer (good) credit based on credit card receivables.   Time to be Square.