Obama and Romney Tap Square for Faster Donations

There's a scene in "The American President" in which Richard Dreyfuss, who plays Robert Rumson, a senator and presidential challenger to Michael Douglas' President Andrew Shepherd, speaks with a potential donor in New Hampshire. Having won her support, the Dreyfuss character proclaims "I'll be taking that money off your hands right now."

The problem with the scene is political donations usually don't work that way — at least in the case of the smaller donations from individual voters. Since people rarely carry checkbooks to political rallies and campaigns staffers don't normally carry credit card readers, "on the spot" donations are more often commitments to donate money at a later time in a more secure manner, an inexact procedure at best.

But President Obama and his most likely Republican challenger, former Massachusetts Governor Mitt Romney, are trying to make donations more immediate by using Square readers, which allow staffers to collect donations via mobile payments. This allows the campaigns to pick up donations on the spot, such as after a speech or a rally when the passion of the attendees is at a high point and people are most likely to want to give their money to a political campaign.

While much of the campaign finance attention in the current cycle has focused on Super PACs, the use of Square demonstrates the continued importance of individual donations, which can be a better measure of voter enthusiasm than substantial corporate donations. Square offers a means to both collect and track donations from a large number of individuals quickly. "Square has demonstrated that it's a great way to collect money on the spot," says Beth Robertson, director of payments research for Javelin. "That demonstration has allowed it to take off in a more significant way for political donations."

Square works by attaching a white square dongle to a smartphone and downloading the Square app, both of which are free. The donors swipe their payment cards to directly make a payment, rather than keying in credit card data or verbally giving that credit card information to another person that the donor has never met. The donations are processed immediately, and the donors receive a receipt via text message or email. There's no check out hardware involved, enabling staffers to walk through crowds picking up donations on the fly without carrying any equipment beyond their own smartphones. Square collects a 2.75 percent fee for each transaction.

"People don't always have a check and can pay with a card, but may be reluctant to give that out [at an event] for security purposes," says Robertson. "Square enables the transaction to occur when the time is right for the person who wants to make that donation, and that helps the campaign collect more in funding."

The moves by the campaigns are a coup for Square, which faces stiff competition from PayPal and mobile payments initiatives such as ISIS and the Google Wallet. All of the presidential campaigns offer PayPal as a means to donate. A spokesman for VeriFone said it's not aware of any use of its PAYware Mobile product by a presidential campaign, "but any organization can utilize our PAYware Mobile product with an iPhone to collect card-based donations-they just have to sign up for a merchant account which is pretty easy these days." The VeriFone spokesman also noted that PAYware Mobile has been used by charitable organizations to collect donations.

In a statement to BTN, Square confirmed that both the Romney and Obama campaigns are using square for donations. The payments firm also said it worked with the campaigns to ensure compliance with Federal Election Commission regulations when collecting donations.

The firm said other similar fundraising uses of Square included the Salvation Army, which used Square during the holidays to collect donations via credit cards at red kettles across the U.S. In that initiative, the Salvation Army accepted credit card donations at 10 locations in San Francisco, Dallas, Chicago and New York. Square supplied the organization with card readers, and Sprint Nextel donated the phones using the reader.