How Apple's Lightning-Plug Guru Reinvented Square's Card Reader | Wired Design | Wired.com

How a Custom Chip Creates a Cascade of Consequences
The even greater undertaking with the new Reader, however, was the development of a custom chip, built from the ground up. “It’s not typical for a startup to do that,” Dorogusker says. “It’s a little bit of upfront cost to build this from scratch.” But the benefits were huge. After all, this tiny fleck is the brains of the operation. And by building their own chip, Square was able to improve several aspects of the product–its performance, its size, and its overall reliability–in one stroke.
On one level, developing a custom chip gave Square total control over the processes at the heart of the product: Decoding the magnetic signal from the credit card, encoding the electrical signal being sent to the smartphone, and all the encryption that happens in between. “We take all of that very seriously,” Dorogusker says. “We know exactly what we need. Off the shelf solutions could do what we wanted but had a bunch of extra.”
In terms of the design of the internals, though, the chip offered another fantastic advantage: an opportunity to ditch the Reader’s battery. The old version relied on a coin cell, which added around two millimeters to the overall thickness of the device. With their own chip, though, Square was able to be much more efficient in their use of power, to the point that they could draw all they needed from the smartphone via the audio jack. As a result, the new Reader dropped the battery and two millimeters along with it. “For the nerds on the team, that is crazy awesome,” Dorogusker says.
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