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SQUARE extends acceptance of the good old bank-issued credit card to merchants who were otherwise only accepting cash, thereby adding a new stream of interchange revenue to the good old banks. In doing so, SQUARE insulates banks from dealing directly with such merchants whom they hitherto declined merchant accounts on account of a higher risk profile. To me, that makes SQUARE a great reseller - not competitor - of banks.

To paraphrase the old saying about America's influence on the rest of the world, when Apple sneezes, fanboys would like the whole world to catch cold. After a gap of 3-4 years, we’ll see scifi statements like “mobile payments will disintermediate banks” making a comeback. I hope these tall claims won’t steadily get watered down, as they did the last time around, to "mobile payments will kill plastic", "mobile commerce is mobile payments" and, eventually, “mobile payments are invisible”. Despite funding accounts in iTunes being held in banks and card processing inside iTunes happening on banking rails, a lot of people will find reason to believe that Apple will disintermediate banks. Hope they’re right this time - I’m tired of paying with the same old cash, cheque and plastic and could do with some new mode of payment now.

Just to update this post with a significant development since I wrote it, Square Wallet, one of the two listed methods of making mobile payments at Starbucks, is now dead. 

India's largest bank, State Bank of India, has been running floating ATMs for around 5 years in Kerala, an Indian state with a lot of backwaters. 

This is yet another example of what I've heard many angel investors say time and again viz. at this stage of a company, the creds of the founding team matter more than anything else.

Based on my company's experience of improving "browser to buyer" conversion of a bank's online account opening portal, let me answer the questions in your last paragraph: (1) Using a website visitor tracking tool, we identified 8-10 friction hotspots that led to massive abandonments in the 3-step process of applying a new account online e.g. mismatch between branch name and address, ambiguity regarding fees (2) According to the then prevailing regulation, signature specimen was mandatory and was collected by having the applicant signing a printout of the online application in wet ink (3) Newly opened accounts can be funded by cheques drawn on or via EFT from preexisting accounts in another bank (4) Amendments to regulation now permit digitized signature, which is obtained by the applicant using their finger to sign on a tablet's touchscreen. (5) F2F verification of applicant's existence and signature, along with proof of identity and address, are mandatory but don't necessarily require a branch visit. One bank sends its employee to the applicant's home / office with a tablet. This banker uses the tablet's camera to click the applicant's photo and scan their POI and POA documents. 

@NickC: LOL. Hope you didn't mean "move on SWIFTly"?:)

@TonyW: TY for your comment but I must respectfully disagree about the sequence of activities: The fun is in first drinking the Kool-Aid of Big Data because it's, well, cool. Then unraveling hitherto unknown trends. Then taking the recommended actions. Then deciding whether to have a plan or not!

@NickC: TY for your feedback. Just out of curiosity, did this bank shed this unprofitable segment?

@AndrewS: I was born before PCI-DSS came into force and I still didn't know that the standard was applicable for mobile wallets. Therefore, I won't blame mobile wallets for non-compliance. Probably many of their founders belong to GenY and don't even know about PCI. I’ve heard it said that GenY is a generation that refuses to recognize anything older than itself, which PCI probably is. TY for clarifying the circumstances under which PCI compliance is mandatory for mobile wallets. Any idea if there're many mobile wallets that don't store card details and are hence PCI-exempt? 

@BrettK: I didn't know hard currency went away - post Target breach, I hear there's an uptick in the preference for cash in USA. You might be pleased to know that HDFC Bank in India just introduced passbooks. Maybe they'll take your advice and introduce clam shells and buck skin when they do their "next refresh"!