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Will America get moving on mobile payment?

I was fascinated the first time a friend demonstrated Square to me.  She attached the card reader to the top of her iPhone, swiped a credit card through, and showed me the user interface for the transaction.  Amazing.

 

Any new idea clashes with old thinking.  The same thing is happening again with mobile payments.  The New York Times again had excellent coverage: Swiping is the Easy Part.

 

The title is a clever jab at this dilemma.  Developing a payment platform is a feat of engineering.  However, it pales in comparison to wrestling not one, but six entrenched industries into agreeing how to divide the profits: banks, credit card companies, payment processors, phone carriers, phone manufacturers, and Internet giants.  That's not even counting the retailers, and whether they'll adopt the new technology in enough numbers for the project to be feasible. 

 

Watching these large companies squabble as a big tech shift is emerging, there's this odd feeling of déjà vu.  We've seen this movie before.  It usually ends with a nimble upstart stealing market share from the flat-footed old interests.  In music, it was iTunes.  In movies, Netflix. 

 

Could Square be the David that beats these Goliaths? As I said in my last blog post, I love my long reads.  So I couldn't resisting sharing this book-length Vanity Fair article about Twitter founder Jack Dorsey: Twitter was Act One.  Among other things, it covers his big plans for Square.

 

Curious how America is so late to the mobile payment game.  Parts of Europe and Asia are already using their phones with near field communications (NFC).  Using your phone to pay at subway turnstiles is pretty common in places like Japan.

 

Africa is one to watch.  They seemed to have skipped landlines and gone straight to mobile phones.  To be fair, they send money by using text messages, not NFC.  Still, mobile payment is widely used and functioning, compared to America.

 

Maybe there's a lesson in there.  Sometimes the fastest path to innovation is frugality, not billions in capital. 

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Comment by James Pakele on April 19, 2011 at 6:46pm

Better yet.... an app that, when you walk into the store, connects to the store's WiFi and public network which provides access to a database with prices that can be called up by scanning the barcodes already on the products.  As you add items to your cart, you scan the barcodes which runs a tally that picks the prices off the stores publicy shared price database, which they can be updated for daily specials or whatever.  In essence turning your phone into the self-checkout station.  On your way out, scan a QR code located at front of the store and process your payment with PayPal, Google Checkout, iTunes account, whatever...  Have it print out a receipt and you're out the door...  encourage people to bring in those fabric bags and they can bag while they shop, with no lines to speak of...

 

I have a Motorola Atrix, which I've written about time and again.  This phone is amazing and has one feature which I don't see on any other phone, that I would NOT want to have a phone without ever again... the fingerprint scanner... This means my phone is ALWAYS locked with a 8-10 digit passcode, used only if the scanner breaks, that I'm not required to constantly enter because I just need to run my finger over the scanner.  This in combination with an app like Lookout for Android or MobileMe for iPhones that allows not only GPS tracking, but also remote wiping, and I'm pretty comfortable...

Comment by Marcus Sortijas on April 19, 2011 at 6:34pm

@James: Your talk of QR codes was an angle I hadn't considered.  It does seem like all the elements already exist to use them as a payment platform.

 

Now I'm wondering if that would eliminate that bane of shopping: waiting in line.  You could walk into a store.  Every product has a sticker with a QR code.  You pick up a bottle of guava juice or whatever, and scan the QR code with your smartphone.  Instant payment, and you just walk out of the store.  That kind of technology would turn supermarkets into public kitchen pantries.

 

Using QR codes for person-to-person brings up that sticky problem of, "What happens if I lose my phone?"  Companies will probably install some kind of kill-switch they could activate if you report your phone as stolen, similar to what happens with credit cards.

Comment by James Pakele on April 19, 2011 at 6:18pm

I don't know how all the payment percentages break down but I've always wondered why businesses could provide a QR code that directs users to their PayPal account.  The person could make the payment and the vendor would get an instance notification/verification of payment.  That's something everyone could do, right now.  People could do it from phone to phone.. have an image of your own QR code, the other person scans it, makes the payment and the email gets pushed to the payment recipients phone... Businesses could do it by displaying a QR code near the register.  

 

Maybe I'm over simplifying, but it seems to me all the ducks are in place for that type of system....

Comment by Brian on April 11, 2011 at 2:10am

Square is neat for the low-cost, trivially deployable PoS system it is.

 

Ultimately to me though, it's kinda like those Blu-Ray/DVD/Digital combo packs - missing the point. In that case, what I want the distributors to realize is that I just want to buy a license for the content. Format? Who cares about that. Likewise most of us probably do more debit/credit transactions without even using a physical card anymore. The card is just a token that represents some content a merchant and I need to conduct a transaction.

 

The actual card itself is irrelevant, as will eventually be a little device that plugins into a phone. It reminds me of acoustically coupled modems, something probably nobody remembers anymore. Converting a data signal to digital to analog and back to digital using some glorified earmuffs and an unnecessary physical interface. Nice stopgap, but ultimately is solving the wrong problem.

 

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