How Square Uses Your Phone's Location to Verify Credit Card Payments
A system that uses GPS data from a customer's smartphone to confirm they are physically present at a store during a credit card transaction to reduce fraud.
Original patent title: “Performing actions based on the location of mobile device during a card swipe”
A system that uses GPS data from a customer's smartphone to confirm they are physically present at a store during a credit card transaction to reduce fraud. Granted to Square Inc in 2019 with 21 claims and 9 forward citations.
Key facts
Coverage
What does this patent actually cover?
This patent describes a method for verifying that a customer is actually at a merchant's store when they use their credit card. The system first calculates the approximate location of a card reader by aggregating GPS data from many customers' phones who have previously shopped there. When a new transaction occurs, the system pings the customer's phone to get its current GPS coordinates at the exact moment the card is swiped. By comparing the phone's location to the established location of the card reader, the system determines if the customer is truly present, which allows the merchant to skip extra fraud checks.
The gap
What does this patent NOT cover?
- Does not cover fraud detection methods that rely solely on card-present indicators without GPS verification.
- Does not cover systems that track location using Bluetooth beacons or Wi-Fi triangulation instead of GPS.
- Does not cover transactions where the customer's mobile device is not linked to their payment card in the merchant's database.
- Does not cover the physical design or internal circuitry of the card reader itself.
These exclusions are unique to PatentBrief — derived from the actual claim language, not patent-office boilerplate.
What made this novel
Instead of relying on the merchant to manually report their location, the system 'crowdsources' the location of the card reader by analyzing the GPS history of many different customers, creating a reliable map of where the reader actually lives.
Schematic visualization of the patent's claim structure. Hand-drawn diagrams in progress for each landmark patent.
Where you've seen this
Real-world examples
Square Point of Sale systems
Mobile payment apps with integrated fraud detection
Contactless payment systems using geofencing
Why it matters
The bigger picture
This technology helps merchants like those using Square's platform reduce 'false positives' in fraud detection. By confirming the customer is physically present, the system can approve transactions faster and with less friction, which is vital for small businesses that cannot afford to lose a sale due to an overly cautious automated security system.
Filed
February 18, 2014
Granted
February 5, 2019
Market context
Who's building on this
Companies in this space
Square (now Block, Inc.) continues to refine its ecosystem of merchant services. Other major payment processors like Stripe and PayPal utilize similar location-based risk assessment models to balance security with transaction speed.
Market impact
This patent helped normalize the use of smartphone telemetry in financial security. It shifted the industry focus from purely card-based security (like CVV codes) to multi-factor verification using the user's mobile device as a trusted 'second factor' for physical presence.
Claim 1 — Plain English
What this patent covers
This patent describes a method for verifying that a customer is actually at a merchant's store when they use their credit card. The system first calculates the approximate location of a card reader by aggregating GPS data from many customers' phones who have previously shopped there. When a new transaction occurs, the system pings the customer's phone to get its current GPS coordinates at the exact moment the card is swiped. By comparing the phone's location to the established location of the card reader, the system determines if the customer is truly present, which allows the merchant to skip extra fraud checks.
The clever bit
Instead of relying on the merchant to manually report their location, the system 'crowdsources' the location of the card reader by analyzing the GPS history of many different customers, creating a reliable map of where the reader actually lives.
What it does not cover
- Does not cover fraud detection methods that rely solely on card-present indicators without GPS verification.
- Does not cover systems that track location using Bluetooth beacons or Wi-Fi triangulation instead of GPS.
- Does not cover transactions where the customer's mobile device is not linked to their payment card in the merchant's database.
- Does not cover the physical design or internal circuitry of the card reader itself.
Patent timeline
Application submitted to the patent office
Application published, typically 18 months after filing
Patent officially issued
PatentBrief Score
Impact Score
Moderate
Citation count
20/40
Early citations
Claim breadth
14/20
Broad claimsclaimsThe numbered statements at the end of a patent that legally define what the inventor owns.Read more →
Recency
10/20
Granted 5–10 years ago
Assignee scale
0/20
Independent or smaller assigneeassigneeThe entity that owns the patent — usually the inventor's employer or a company.Read more →
PatentBrief Impact Score — based on citation count, claim breadth, recency, and assignee scale. Not a legal assessment.
Heuristic Value Estimate
What this patent might be worth
$125K – $399K
Midpoint $250K · 7.7 yr remaining · industry ×1.6
Heuristic only — blends forward/backward citation counts, claim scope, time remaining, litigation history, and CPC-derived industry baseline. Real valuations need a professional appraisal.
The original legal language
Original claims
21 claims as filed with the patent office.
Concepts involved
Citations
Patent lineage
Cite this patent
Morel, S., Spindel, N., & Khandker, N. R. (2019). How Square Uses Your Phone's Location to Verify Credit Card Payments (U.S. Patent No. 10,198,731). U.S. Patent and Trademark Office. https://patentbrief.org/patent/us/10198731/shopify-e-commerce-platform
Auto-generated from the patent record. Double-check author order and the issue date against the official USPTO document before submitting.
Embed
Add this patent to your site
Drop this plain-English patent card into any blog post or article — free, no signup. It always links back to the full breakdown here.
<div data-patentlens-widget data-patent-number="US10198731"></div> <script src="https://patentbrief.org/embed.js" async></script>
Stay in the loop
Get a weekly digest of new patents.
One email per week. No spam. Unsubscribe anytime.
Keep exploring
Related patents you should know
US 4683195 · 1987
How to Make Billions of Copies of a DNA Segment
This patent describes the Polymerase Chain Reaction (PCR), a method to rapidly create many copies of a specific piece of DNA or RNA, enabling its detection and analysis.
Cetus Corp
US 8697359 · 2014
How to Edit Genes in Human Cells Using an Engineered CRISPR System
This patent describes an engineered CRISPR-Cas9 system for precisely cutting DNA in eukaryotic cells to change how genes work, opening the door for gene editing in complex organisms.
Massachusetts Institute of Technology
US 7657849 · 2010
How the iPhone's Slide-to-Unlock Gesture Works
Apple's 2010 patent describes unlocking a device by dragging a specific graphical image across the touchscreen along a predefined path, a gesture that became iconic with the original iPhone.
Apple Inc
US 4733665 · 1988
How Doctors Implant a Permanent Stent Using a Balloon
This patent describes the method for placing a permanent, expandable wire mesh tube inside a blood vessel or other body tube using a balloon-tipped catheter to widen it and keep it open.
Expandable Grafts Partnership
US 4965188 · 1990
How to Make Many Copies of a DNA Piece with Heat
This patent describes the Polymerase Chain Reaction (PCR) method, a technique to make millions of copies of a specific DNA segment using a heat-resistant enzyme and repeated temperature changes.
Cetus Corp
US 4235871 · 1980
How to Encapsulate Active Materials in Lipid Bubbles Efficiently
This patent describes a method for trapping biologically active substances inside tiny, multi-layered fat bubbles called liposomes, using a specific water-in-oil emulsion and gel-forming process to improve how much material gets captured.
Individual
More to explore
More in Consumer Electronics
US 7657849 · 2010 · Apple Inc
How the iPhone's Slide-to-Unlock Gesture Works
US 7479949 · 2009 · Apple Inc
How Touchscreens Understand Your Finger Swipes and Scrolls
US 4528643 · 1985 · FPDC Inc
How Stores Make Custom Products On-Demand with Remote Approval
US 7469381 · 2008 · Apple Inc
How Touchscreens Show and Snap Back When You Scroll Past an Edge
New to patents?
Common Questions
Frequently Asked Questions
What does How Square Uses Your Phone's Location to Verify Credit Card Payments cover?
A system that uses GPS data from a customer's smartphone to confirm they are physically present at a store during a credit card transaction to reduce fraud.
Who owns patent US 10198731?
Square Inc owns this patent, granted in 2019.
When does this patent expire?
This patent is expected to expire on February 5, 2039, when the invention enters the public domain.
What is patent US 10198731 cited by?
This patent has been cited by 9 later patents that build on its ideas.
What problem does this patent solve?
This technology helps merchants like those using Square's platform reduce 'false positives' in fraud detection. By confirming the customer is physically present, the system can approve transactions faster and with less friction, which is vital for small businesses that cannot afford to lose a sale due to an overly cautious automated security system.
What does this patent NOT cover?
Does not cover fraud detection methods that rely solely on card-present indicators without GPS verification.
Same assignee
More from Square Inc
Patent monitoring