Earlier last week, Starbucks made a square deal with Square creating m-commerce history.
The company announced that later this year, all of the stores owned by
Starbucks will switch to using Square's payment processing service including its
signature card swiping device, which plugs into a Smartphone or tablet. In
addition, Starbucks will also support payments for various goods by Square’s "Pay with Square" application, available on IPhone, iPad and
Android Devices. Pay with Square uses innovative GPS technology and allows
consumers to make purchases and settle tabs without ever removing their mobile
device from their pocket. The GPS technology allows user's smartphone to
recognize that it’s within 100 meters of a participating retailer and, if the
user has allowed the app to do so, automatically open a tab. The user can
complete the transaction simply by giving their name; the merchant can verify
by matching a user’s photo which pops up on the screen.
The pay with square application is an alternative
for mobile payment to Google Wallet and other NFC based payment schemes. The NFC
(near field communications) requires phones to be equipped with a NFC
capabilities, as well as requires retailers to upgrade to NFC capable cash
registers whereas "Pay with Square" just requires merchants to install a software
application.
The deal saves not only saves Starbucks
transaction costs - Square charges a flat fee of 2.75% on all card transactions
which no minimum or fixed surcharge - but also a chance to invest 25 million dollars in Square and a board seat for
Starbucks’ CEO Howard Schultz on Square's board of directors
This deal places Square right in the middle of the mobile payment revolution – it’s square device has already been very popular among small merchants and people selling in informal settings such as farmer’s and flea markets and street festivals. However, most of its current customer base uses its signature card swiping device which works with traditional credit cards. The Pay with Square service on the other hand replaces the credit card with user’s smart phone.
This deal places Square right in the middle of the mobile payment revolution – it’s square device has already been very popular among small merchants and people selling in informal settings such as farmer’s and flea markets and street festivals. However, most of its current customer base uses its signature card swiping device which works with traditional credit cards. The Pay with Square service on the other hand replaces the credit card with user’s smart phone.
While Square already has two million users with more than $6 billion in payments processed annually; most of
the current customer base uses Square’s card swiping device. The Starbucks deal will
significantly increase Square's reach into consumers who may choose the convenience of
walking into a Starbucks and paying for their coffee using "Pay with Square" without taking out their
wallet or phone out of their pockets.
With this development, now there is another choice for In-Store mobile payments; in addition to NFC (Near Field Communication) backed by Google, Mastercard & Visa; ISIS (backed by AT&T, Verizon, T-Mobile & American Express), and Paypal's PIN/ number based Wallet. Given so many new mobile payment technologies on the horizaon, no doubt all
small and large retailers must now serious consider supporting mobile payments—since
there is now no way but onwards.
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