Square Takes Philanthropic Swipe with Red Reader

Financial services startup Square is trying to turn the swipe of a credit card into an act of generosity. To pull it off, Square is unveiling a red credit card reader that will serve as a charitable alternative to the millions of white readers the San Francisco company has distributed since its inception five years ago. The Square readers plug into the headphone jack of smartphones and tablet computers so the devices can become electronic sales terminals, empowering more merchants to accept credit cards.

The new color unveiled Wednesday is part of an alliance with (RED), a nonprofit organization that has raised more than $250 million to fight AIDS in Africa during the past eight years.

Unlike the free white reader, Square is charging $10 for each red reader. Square will collect its standard 2.75 percent processing fee on each red reader purchased, and donate the remaining $9.73 from each sale to (RED).

Square hopes to raise $250,000 for (RED) -- a goal that requires the company to sell about 25,700 of the red readers. The red reader will be sold only in the U.S. Square also processes payments in Canada and Japan, but the company is sticking with its white reader in those countries.

The red readers have been programmed to spur even more giving. Every time a sale is processed through Square's red reader, the electronic receipt emailed to the customer will include a link offering the consumer a chance to donate to (RED), too. The receipts soliciting (RED) donations will be automatically delivered for as long a merchant chooses to use Square's red reader.

The device gives merchants a chance to "turn their transactions into an AIDS-fighting machine," said Deborah Dugan, CEO of (RED). Dozens of merchants in Los Angeles, New York, Atlanta and Miami already have...