Square’s claims that the updated iPad app is a cash register replacement may not be applicable to all merchants, adds Todd Ablowitz, president of consulting firm Double Diamond Group LLC.

A merchant may not be able to use Square if its payment card volume grows past a certain point where the card brands—such as Visa Inc. and MasterCard Inc.—require a retailer to have its own merchant account, he says. Square is an aggregator, meaning merchants who use its service do not have their own accounts with a payment brand.

“Once you get bigger, the business proposition for using Square gets a little dicey,” Ablowitz says, though he expects that is an issue Square is working on. Square did not respond to Internet Retailer inquiries.

Internet Retailer, May 24, 2011