It was only a matter of time before innovative payment companies would be stifled by regulators in the USA. A few years ago, while attending the NACHA Payments conference, they had the founders of Square share their vision and then those gentlemen took some pretty intense questioning from the banking experts. After the session the conversations that I heard centered around that fact that the risk of underwriting in the environment that they discussed such as 'babysitters can now take credit card payments' and 'dog walkers can now accept credit cards on their phones' would never be realized in the current banking environment. As we now know and saw demonstrated, Square was able to find a bank and sell them on their vision and in 2012 processed at least $10million in payments.
It seems likely that their sheer size and new products have them in the spotlight resulting in the regulators in Illinois issuing a Cease and Desist order. If you are so inclined, here is the actual order http://www.idfpr.com/dfi/CCD/Discipline/SquarePersonifiedCDOrder13CC208.pdf There are numerous posts, articles etc about this C&D if you simply query it on the web you will be able to find lots of chatter about it.
It appears that Square and others that are moving money will need to be licensed to do so.
