I think that's just going to hurt small businesses with physical nexus in one state, who do some e-commerce in the rest of the country.
Why would it? If you have a physical location already, you're passing through sales tax already. Compliance costs are a lookup table and a middleman; if Square promises to provide tax compliance to all merchant accounts, Paypal, Visa, Venmo and everyone else would have to do the same.
Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming have no income tax. Their infrastructure is paid for by sales tax. Their local brick'n'mortars are being punished by not only maintaining a retail location but by having to charge customers a premium; when I buy computer stuff yer damn skippy I buy Newegg rather than Amazon because it's 11% cheaper. Repeat times everything you buy.