If Apple had charged $49 (or even $9.95) for iTunes instead of giving it away, would they have been able to achieve their non-violent takeover of the entire music industry? If they gave the software free, but then required you to buy entire albums, would they still have been the disruptive force?
The internet is full of success stories where a key component is provided free to customers and the company makes it's fortune providing the rest of the solution.
Square is going to grab the credit card world by the ears by following the same strategy. They are making it incredibly easy for anyone to start taking credit card payments at competitive rates WITHOUT having to shell out money for a credit card swiping machine, WITHOUT having to sign a long-term contract, with NO MONTHLY FEES or minimums, and NO SETUP FEE.
Square is GIVING YOU a simple little device that plugs into your iPhone or iPad headset jack and you can start swiping credit cards. This is a no-brainer. They are DISRUPTING the model. They are attacking by taking some of the current profit centers out from under the current players. There are companies making a sweet fortune by selling machines, charging monthly fees, setup fees, etc. Take it all away from them and you have just created CHAOS in their world.
What can you do to disrupt the model in your world?