Hasta La Gadget!

A bunch of big retailers including Wal-Mart, Target, 7-Eleven, and Sunoco are supposedly getting together to launch a joint mobile payment system called Merchant Customer Exchange (MCX), the WSJ is reporting. But seriously, why another network? Google Wallet is promising, but it’s not on many devices, nor is it available at many places. Why can’t we just settle on some kind of mobile payment standard? [WSJ] More »

This week eBay board member and CEO of Starbucks Howard Schultz spearheaded an investment by the coffee giant in the mobile payment company Square. This is not the same acquisition-type situation that occurred back in 2002 when eBay picked up PayPal, but it could end up having many of the same giant results as that deal did. Speaking with Wired on the subject of this business tie, Schultz noted that after seeing a presentation about Square earlier this year, “it was very obvious to me that this was a game-changer.”

But what does this all mean for you, the Starbucks user? It means that you’ll be able to pay for your drink (and your snack, if you’re into that), much quicker, simpler, and more digital than ever before – soon! While Square is already company that’s out on the market today, this meaning you can use the little square gadget they’ve made for smartphone and tablet users in stores already, they’ve got big plans for Starbucks.

First, with Starbucks investing in Square, development between the two will be advancing at a much faster pace. Once Starbucks is ready to adopt “Pay with Square” technology, they’ll be listed in Square’s system which uses GPS location technology to identify nearby Square-ready businesses. Starbucks giant investment will mean much more than likely that they’ll be featured – at least in the coffee section.

With this system, you’ll be able to “check in” at a Starbucks before you arrive.

If you are checked in, the barista has only to identify your face and match it up with the user they’ve got in the system – and there you have it. You’ll be able to order whatever you like and the cost will be charged to your account. No devices necessary outside the first check-in on your phone. No credit cards or cash needed, either, this perhaps the most important element of the whole system.

Square doesn’t currently provide businesses with purchase history, but with Square’s hopes for next-level personalization, it is possible that you’ll be able to walk in to your favorite store in the future and walk back out without even having to specify what you want.

The usual, coffee jerk!

And there you have it!

SlashGear 101: How will I pay for Starbucks with my iPhone in the near future? is written by Chris Burns & originally posted on SlashGear.
© 2005 – 2012, SlashGear. All right reserved.

Starbucks has inked a deal to use the Square payments system in its 7,000 US stores, as well as splashing out $25m of investment into the Square company itself. The deal, which will see credit and debit card transactions made using Square’s Pay with Square app for iOS and Android as of this fall, is expected to increase the number of times card payments are made for smaller transactions that might traditionally have demanded cash or not met a minimum payment threshold for the retailer.

Starbucks locations will also be added to the Square Directory, the list of locations which support the system, while the same data will also be leveraged for Starbucks. Eventually, Starbucks Digital Network and Starbucks mobile payment app users will be able to see the same range of Square locations in their apps.

According to the coffee chain, switching to Square for US credit and debit card transactions will reduce its payment processing costs in addition to giving the system itself a far higher profile among consumers. That’s something Square CEO Jack Dorsey is particularly keen on, going so far as to point out that even Starbucks rivals will benefit from the greater attention.

“When Starbucks builds the Square Directory into their apps and in-store Digital Network, it gives Square new visibility, driving more customers to opt-in to Square” Dorsey wrote in an open letter to users. “And with nearly 7,000 Starbucks stores soon accepting Square, these new payers will be able to find your business (including coffeehouses) and pay with their name, building community and creating value.”

In addition to the $25m investment, Starbucks CEO Howard Schultz will join the Square board of directors. You can download the Pay with Square app here, for iOS or Android devices.

Starbucks gets a shot of Square for in-store payments; Invests $25m is written by Chris Davies & originally posted on SlashGear.
© 2005 – 2012, SlashGear. All right reserved.

I have to admit, when I first heard about the Kickstarter project for the iCache Geode Mobile Wallet I thought to myself  “yeah right…good luck with that.” The process seemed unlikely to me.

First of all, how are the card networks ever going to let someone temporarily “clone” their cards onto another dynamic card? Secondly, how fast could the process work? There could be a lot of challenges.

I was able to get my hands on a newly shipped unit and put it to the test. I captured the results in the video below. Does it work? Yes, it actually completes payments at places that accept it. There is definitely a learning curve to use it successfully, but after I figured out the total procedure and practiced it a few times, the Geode and it’s little GeoCard actually let me buy some things.

It’s pretty well documented at this point, but if you don’t know what the iCache Geode is, it is an attempt to convert the iPhone into an all-in-one digital wallet for your credit cards and loyalty cards.

Essentially, it is an iPhone sleeve outfitted with a fingerprint reader (for authentication), an E Ink display on the back for loyalty card barcodes and a single, dynamic credit card that can be temporarily and securely encoded with any of the credit cards you upload into the app. (It also comes with a detachable magstripe reader that you use to swipe and upload your cards into the secure element in the sleeve — a nice touch).

In this way, you can carry a single plastic credit card that can act as any of your credit cards, whenever you need them. This sleeve/case works seamlessly with an iOS app that manages all your payment and loyalty cards.

A Few Caveats
Does it work everywhere? Unfortunately, not everywhere I tried could accept the card. The two self-service gas stations where I attempted to use it would not accept it. During a quick call with the makers, iCache Chief Strategy Officer Erik Ross explained that there is a known issue with dip-style credit card readers (the kind you insert and pull out manually) and that they are working on getting the GeoCard to work with them.

Another thing is that you have to remember to “flick” the card with your fingers to activate it after you have loaded it with your card info but before swiping it. It’s kind of a hassle, but it’s not for arbitrary reasons and rather is how the battery life in the card is conserved — it’s not activated until flicked. According to iCache, a new version of the GeoCard will be coming soon that is rechargeable.

As for how the big card networks allow this dynamic card to be used on their networks…I’m not completely sure. But apparently iCache is being treated like any other issuer and as long as the card meets size, security and operational rules (which it must be doing), it sounds like it is good to go.

I inquired with iCache about this and they told me that GeoCard transactions look like any other payment card transactions during processing and that the card meets CAST standards (Compliance Assessment and Security Testing).

The Bottom Line
I really like the Geode and would continue to use it myself, but I’m not sure I would leave all my credit cards at home just yet. It’s not a 100% bullet proof solution for payments in my estimation. I mean, regular credit cards get declined from time to time too. But the Geode was 3 for 6 in my attempts (3 out of 4 in the video and 0 out of 2 at gas stations). That’s 50% effective in my little field test and not enough to instill confidence to carry it alone.

I realize that this defeats the purpose of having a mobile wallet — it has to work as well and often as your regular wallet or you are just inefficiently carrying around two wallets — but what can I say…as a payments nerd, I just think the Geode is cool.

The other challenge the Geode will face is one of perception. Any problem with a purchase at all — even a delay of a few seconds or holding up a line while you are fooling around with a newfangled card — can cause a sort of stigma for the purchaser. I felt it myself as I attempted to use the card at one of the locations but had to reboot the app to get the fingerprint scanner to log me in.

Any weirdness or problem with any credit card draws attention to the user that could be interpreted by others as “uh, oh…this guy doesn’t have enough money in his account”. It could be embarassing and lead people to question attempting use the next time.

Also, the case is kind of large.

BUT…

I am pretty forgiving when it comes to products that are sincerely trying to innovate and this thing is clever. Assuming the company maintains the product, the GeoCard will be accepted at more and more places. And despite some launch limitations I want to emphasize that I still think the Geode is a great idea and a real business opportunity for iCache.

Particularly on the loyalty card front, the Geode E Ink display solves some real problems caused by the current limitations of existing mobile hardware (namely the ability for digitized loyalty cards to be scanned by legacy, laser scanners).

I think one also has to remember that the Geode is attempting to change some features of an entrenched payment system and that is no small feat. In the USA, the credit card industry has remained mostly unchanged for 20 years and building a multi-use dynamic card definitely colors outside the lines.

These attempted changes — the same things that could cause some short term bumps in user experience — are what uniquely identify this product. It’s possible that they could reach enough scale to offer the hardware for free or reduced prices — remember that the $160 price tag on this version was tied to Kickstarter project for development.

But the biggest thing to think about, from a business standpoint, is that the Geode is really solving two problems. With it, iCache are attempting to offer a solution that works for the current payments paradigm (based on physical cards), but at the same time they have a powerful mobile wallet app that poises them to remain a player when the existing payments infrastructure evolves enough to allow ubiquitous digital/mobile payments. There will be a lot of competition in that swiftly approaching mobile wallet space (another issue altogether), but getting into it now could help them remain viable in the future…or become an acquisition target.

My prediction is that, as secure elements begin to be offered in more and more mobile devices, iCache will shed their own hardware and their wallet app will be able to work directly with phone hardware, instead of with external cases. Or perhaps they’ll shed the secure element scenrio altogether and offer a purely cloud-based solution. In any event, their business model seems to have its eye on current and future states of the payments space and that’s a smart approach.

Last year, there was one subject that nobody could get enough of in the mobile industry: near field communication (NFC)-powered mobile payments. Google launched its digital Wallet service, and Verizon, T-Mobile, and AT&T announced an unparalleled joint venture to get in on the action as well. So a company trying to get in on the ground floor of NFC sure seemed like a good idea, but the problem is you never know what the future will bring.

And unfortunately for ViVOtech, the future brought an extreme decline in excitement for NFC payments and a very sluggish path to bringing this to the masses. Vivotech raised tens of millions of dollars mainly to manufacture credit card terminals that could accept mobile payments. Now, however, it is looking to sell off that huge chunk of its business. It will still exist, but only as a much smaller software company.

Instead of NFC, which requires users to have a special piece of hardware in their phone as well as an accepted credit card account, and also required retailers to have the necessary equipment, and not to be outdone also requires users to have a special app installed on their phone, the mobile payment space has become dominated by mobile credit card terminals, allowing peer-to-peer payments and also software-based alternatives that don’t require new hardware. Poor Vivotech…

[via GigaOM]

ViVOtech may be the first victim of slow NFC adoption is written by Mark Raby & originally posted on SlashGear.
© 2005 – 2012, SlashGear. All right reserved.