The use of mobile card readers to collect small dollar donations exploded in 2012 and it was Square that captured the political market. Both the Obama and Romney campaigns used Square’s hardware at events, but fundraisers say the company will have some serious competition in the political space in 2014 and beyond.
Several political technology firms are working to integrate mobile card readers with their campaign and compliance software, meaning Square won’t be the only reader on the campaign trail next cycle. “Given the success that Square has had in the last quarter, campaigns really want the technology available to them. They can see the convenience at events,” says Ginny Badanes, political director at the Republican fundraising and compliance firm CMDI. “In the next four years, you’re going to see card swipe as the solution in the field.”
But despite the hardware’s convenience to political committees, there are still some nagging issues with the Federal Election Commission’s reporting requirements or receiving donations in a timely fashion using the device. Earlier this year, Aristotle teamed with Square to help fix some of the issues, and political technology firms like NGP VAN and CMDI are now working on integrating other hardware with their software.
For Badanes, Square’s technology doesn’t offer campaigns the sort of flexibility they really need, which is why CMDI is one of the firms developing its own card swipe solution. Badanes says the problem is two-fold. First, Square maintains its own merchant accounts—acting as its own processor and aggregator—which means firms have to rely on Square’s API to get data transferred to their databases. While it’s a common practice, it’s not exactly seamless. Secondly, Square’s reader doesn’t collect all the data necessary to comply with the FEC’s reporting requirements. So if staffers fail to collect the extra info themselves at the time of a card swipe, it’s difficult to track down later.
Badanes says integrating the hardware requires a native app rather than a browser-based system. Square declined to directly address some of the integration questions and wouldn’t talk about where its hardware is headed next cycle.
On the 2012 cycle, a company spokesman would only say Square was “able to give political campaigns on both the national and local level, more effective ways to fundraise. As political organizations know, every contribution helps.” Aristotle CEO John Phillips says it’s hard to predict the configuration of mobile devices two years from now given the rapid evolution of this sector of the industry, but he’s confident Square will be used door-to-door, at least through the 2013 cycle.
Aristotle has focused on integrating Square with the databases of campaigns, political committees and nonprofits. “It’s more than the device; there are going to be 100 different card readers out there,” Phillips says. “Part of it is the plastic, the discount rate, the integration and the vetting.” A thousand Square card readers were provided to both the Obama and Romney campaigns, and Aristotle has produced instructional videos for staffers.
One alternate option from the fundraising firm Click & Pledge has already hit the market. The company released its Swiper1 mobile card reader in October boasting greater integration capabilities. “Square is naturally a simple product; you make a payment and the process gets charged,” says Kamran Razvan, CEO of Click & Pledge. “Click & Pledge is an open API platform; our API is far more complete than Square’s.” Swiper1 is designed to integrate with Salesforce—depositing donations into customer-run merchant accounts within 48 hours.
While the platform assists with FEC reporting, campaigns will still have to add custom questions to ensure all requirements are met. Razvan says existing local and congressional campaign accounts are already interested in Swiper1, but Badanes isn’t sure it’s the right solution for campaigns. Right now, Badanes says Square offers campaigns the least friction of entry—she thinks Salesforce is better suited to corporate entities. Long-term, both Badanes and Razvan expect near field communication chips to replace mobile card readers. NFC chips can store encrypted credit card info and communicate it to other chips in close proximity. But the technology is consumer-based, meaning consumers have to buy a phone containing such a chip, while mobile card readers can be provided by campaigns themselves and credit cards already abound. “If I were to gamble, from now through next year card readers are where it’s at, and after that it will be NFC,” Razvan says. “Right now you have to go with what is available—you have to go with what has the most access; every cell phone has an audio jack.”