If this was a play for consumers, then I would agree with you. However, this is a play for businesses, and there is not a day that goes by where SMB aren't hounded by mobile payments startups. Rarely does a B2B startup succeed bc they do things better, they succeed bc their sales staff is relentless.
Saying your product is nicer, cleaner, a better user experience rarely convinces a business.
I'm pretty much a Square fanboy at this point. I'm sure they could improve, and are actively working to do so - but I wouldn't label Square's products as average.
It has < 50k downloads since its launch (almost half a year ago now), I wouldn't call it fantastic if the main function is to spread the word. (not that it is not a great product, the app is awesome!)
You don't need the app to use the service (cc: cash@square.com or request@square.com). We have no idea how many people are using the service.
Remember that for every single person that uses it, they gain another user on top of that. Even more potentially with request@. I consider that a fantastic marketing tool since it must effectively cost them very little to run the service.
No. No it isn't. The mobile payment industry is saturated with a lot of average products and tons of opportunity to do things better.