June 21, 2010

Mobile payments startup Square announced a setback in rolling out service pending resolution of a credit processing risk issue.

Announced in December 2009, Square enables payments through a card reader that is compatible with any device that has an audio input jack, including mobile phones. While the company has dealt with shortages initially, CEO Jack Dorsey said it now must find a way to manage the risk of chargebacks and fraud.

"The way we are handling the risk of chargebacks and fraud is through transaction limits, but we have received feedback that those limits are too low," Dorsey said through a release on Square's website. "We are rethinking and expanding our underwriting infrastructure to address this issue."

Once the issue is resolved, Square readers and accounts will be free pending a credit check.

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