Evan Schuman's StorefrontBacktalk

There are also the practical advantages, such as losing all those paper receipts, a lower interchange fee (for smaller chains and solo-location merchants), easier online reporting stats and the “Get Out Of PCI Free” card. Of course, to truly get out of PCI, the retailer would have to only accept cash, checks and Square. Just one direct Visa charge and it’s, “Hello PCI Paperwork.”

Todd Michaud, the IT VP for Focus Brands (Carvel, Cinnabon, Schlotzsky’s, Moe’s Southwest Grill, Auntie Anne’s and Seattle’s Best Coffee Int’l), is skeptical of whether Square Card Case will do much business beyond the 50-merchant trial, especially when the excitement dies down.

“The fact is that my guess is that a large portion of the people with readers are people like me (and I do have one) who got it for the coolness factor, tried it a few times, but rarely use it,” Michaud said. “This is the Jack Dorsey hype-machine in over-drive. I saw the same thing happen with Twitter. Their PR machine told everyone how popular it was to make it popular. I guess Square got some coverage at the NRA (National Restaurant Association) show this week, getting all the restaurant companies buzzing. I can’t wait to see what happens when the small restaurant companies dive into this, because it’s cool, and then a 16-year-old waitress drops three iPads in a week and the restaurant has to buy new ones at $700 to $1,000 a pop.”

Conway agreed with Michaud’s concerns. “The ‘cool’ factor has led to many people I know getting their Square and, after they showed it off, it sits in a desk drawer. I really like [Michaud’s] dose of QSR reality that many dreamers may be missing.”

Conway also expressed concerns that, with such a tight margin, it won’t take many surprises to derail it. “One thing to watch will be exception items like chargebacks and disputes that can ruin their profit model,” he said. “They’ll blow through the 2.75 percent—especially on low-ticket items—pretty quickly.”

Given the concerns mentioned above and the logistical challenges—not to mention that Square isn’t even initially trying to push this capability for major chains—it would seem to have little near-term impact on retail payment or PCI. But that assumption would not be correct. One of the merchants involved in the trial does not accept any payment cards and limits its tendering to cash, checks and Square. That makes the theoretical retailer able to have customers see charges on their credit-card bill while still avoiding PCI very real.

It means it can be done. Would a tweaked master merchant approach work for major chains? Let’s not lose sight of the fact that Visa—one of the original, and arguably the strongest, backers of PCI—is a financial backer of Square. This much is without debate: Between the telecom carriers fumbling over themselves trying to deal with direct payments and the backroom efforts, mobile payment is going to be getting very interesting for the next year or two.