Street Vendors Pivot From Cash to Plastic

Joe Mangrum makes paintings on pavement with sand. A couple times a week, Mangrum goes to a public space like Union Square or Columbus Circle, gets down on his knees, and dribbles colored sand between his fingers. A crowd often gathers as Mangrum spreads an intricate pattern of swirls, zig zags, and dots across the pavement. It looks a little bit like a rose window in a church or a Tibetan mandala.

“Let it flow. Let yourself go. Slow and low, that is the tempo,” Mangrum says, citing Run DMC and The Beastie Boys to describe his working philosophy.

But Mangrum is a full time artist, and all his income comes from commissions, donations and sales of his art books.

Lately he’s been offering patrons a new way to pay him: by credit card, through a program called Square, which he runs on his iphone.

To demonstrate, Mangrum produces a small black card reader, about the size of a matchbook. The customer simply swipes their card through a groove, the data is saved, the customer signs his or her name on the iphone touchscreen, gives Mangrum their email address and the payment is complete.

As a convenience for the customer, the receipt even includes a map of where the payment took place and a photo of Mangrum.

After several months using Square, Mangrum says he hasn’t had any complaints from customers, and the program has enabled people without a lot of cash in their pockets to buy his $56 book.

For centuries, artists and craftsmen have sold their wares on city streets, and those transactions have almost always been cash-based. Now new technologies offer even the smallest vendors the ability to accept credit card payment, and for some it’s an attractive option.

“A lot of people in this country have moved to paying with plastic. They’re just not carrying as much cash around,” says Square co-creator Jack Dorsey, who also co-founded Twitter.

Last year, Dorsey spent months negotiating with credit card companies, learning their complicated fee structures so that Square could offer users a simple deal. Every time Joe Mangrum takes a payment through Square, Dorsey’s company charges him 15 cents and takes 2.75 perfect of the sale. Square then handles all payments to the credit card company.

There are now about a dozen card swipe systems for personal handheld devices, with names like Swipe It and GoPayment.

“Between broadband mobile and smart phones we’re seeing all kinds of new applications,” says George Peabody, director of emerging technologies at Mercator Advisory Group, a payment industry research company.

Many use card readers, others rely on users inputting their card numbers manually. It’s too early to tell which program will emerge as the market leader.

Peabody predicts close to four million Americans will start accepting credit card payments through their phones over the next four years. Especially handymen, farmers selling produce at farmers’ markets, Chrismas tree sellers, artists like Joe Mangrum--vendors who tend to take payment in cash.

“It is a fact that taking cards improves your ability to sell, particularly these days,” Peabody says.

One possible side effect of this emerging technology: it will be easier to track transactions. And that could mean more sales tax revenues for state and local government, as the cash economy turns to plastic.