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Mobile Payments vs. Your Wallet

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Talk of mobile payments has always seemed to be just talk to the masses, myself included. Summer blockbusters and futuristic movies seem to always have the most high tech swag when it comes to, well, pretty much everything technical. Tablets and smart phones control the world with just the touch of a button and sometimes less than that. Dynamic ads were customer specific and the whole process seemed easy. Ain’t life a peach. And then here we are back in the real world hearing talk of mobile phones taking over while still pulling out a credit card or wrinkled twenty-dollar bill. The problem has always been that mobile control of our lives as basic Americans has forever been a trickle down from the tech nerds. We hear what our phones are capable of, we read about it in Yahoo news or, god-willing, the Sunday paper, and then we get a few scraps of technology and smile at the power at our fingertips when we can control our DVR or buy concert tickets with Ticketmaster’s app. We do this while so much more awaits. The so much more is coming though, and faster than we anticipated.

Square. Google Wallet. The enigma that is iPhone 5. They all sound familiar. They paint a picture of what is to come while occupying a small share of the present. These are the way of the future. But mobile capability is here now and growing in number, growing in acceptance. The ability to pay with a phone is here and has been. The big question is the speed and span of that growth and acceptance.

I bought gas yesterday at Cumberland Farms with my iPhone. It wasn’t easier than swiping my credit card, but I saved five cents a gallon so I made the choice to switch over. That motivation to switch is where this paradigm shift will happen. The clunkiness of using Paypal at the gas station was evident to me. I had to pull out my phone, open the app, let it load my location, and select the pump. It didn’t take that long in the whole scheme of things, but it was enough of a nuisance that I can see Joe Somebody bypassing the process to pull out his Amex or a couple twenties. But getting an app to do the dirty work is a step in the right direction.

Square is taking that step and making it a leap. In a recent article in the San Francisco Chronicle James Temple explains his experience using square’s app at a local Starbucks, saying:

Nobody chased me down because, when I first approached the cafe, the Card Case app on my iPhone detected the store’s perimeter and automatically switched on. It broadcast my picture to the barista, who could then tap my pre-entered credit card number to cover the bill. The phone never had to leave my pocket.

This is a big step in making the switch. Seven thousand Starbucks can be added to the list. Day-to-day purchases can be added to the list. This marks a swing in mobile payments to regular people, regular patrons, and just regulars. Consumers have to, at the very least, feel that using an app is easy, easy as a card, easy as cash, and hopefully easier. Temple’s experience shows that simply enough. Add in the potential for loyalty programs, receipts, and other savings options with GPS advertising of sweet deals and it may be enough to push motivation over the top. But motivation can only go so far if consumers lack retail locations to consume. Thus begins what Temple refers to as “a chicken and egg paradox” where merchants are hesitant to unveil potentially expensive payment structures when consumers aren’t chomping at the bit for them. Conversely, consumers are less likely to move to mobile wallets if they don’t see an overriding reason to do so. But the future of wallets is decidedly mobile, not leather.

In a press release from Starbucks and Square’s CEOs Howard Schultz and Jack Dorsey, they make a bold statement about where the future of payments is headed, stating:

As the largest retail mobile payment platform in the U.S., we’re excited and proud to accept payments with Square. The evolving social and digital media platforms and highly innovative and relevant payment capabilities are causing seismic changes in consumer behavior and creating equally disruptive opportunities for business. Both Starbucks and Square take a similar approach when building products and running our businesses, and together we can bring the best possible payment experience to Starbucks customers.

They go on to speak about the future of mobile payments and how the partnership between Starbucks and Square helps other businesses grow. It’s all very altruistic, press release, blather, but the building blocks have been put in place. Mobile payments are in the public eye. And with Google Wallet, Paypal Here, and near field communications (NFC) technology that allow consumers to make payments by simply tapping their phones near a terminal, there is much to be excited about in the realm of mobile payments. But for this to happen in the here and now, consumers and retailers alike will need to fuel the fire. The battle, if it can be called that anymore, lay in both camps, with consumers and merchants poised and waiting for the change to happen. Both are unaware that their camp has much say in when that change occurs.

There was a time where walking into a Starbucks was a nerve wracking experience for me. I wasn’t sure what all the options meant or even which ones I actually wanted. Which was bigger, tall or grande? How could I order a regular coffee if regular wasn’t even on the menu? I would have been better off pointing at the lady in front of me, stealing a line from my dad, and just saying “I’ll have what she’s having”. I’ve since become bi-lingual in English and Starbucks. Thanks to square at least newcomers to the coffee giant won’t have to fumble with their wallets too.

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