I write more I O U notes than I care to admit. I just never have cash and the coffee shop in my building doesn't accept credit card for purchases under $5 (a practice that violates their terms with the credit cards, but that I support). While I'm always good for the $3, surely there is another way. A way to avoid the awkwardness of buying a friend lunch when he forgets his wallet, and then promptly forgets your generosity. A way to avoid PayPal'ing a friend money for buying your tickets to a conference and have 3% taken off in fees.
Square will revolutionalize merchant payments. But for peer-to-peer paybacks, I'm excited about Venmo, a 100% free way for individuals to text each other payments. Users can deposit money directly into their Venmo account or have it pull from their bank. So instead of writing I O U $2.50, I can text Venmo "send Anita $2.50". We're immediately settled up and transactions costs are 0. Lovely.