It’s a scene cut straight from Cheers. You hit the bar on the way home — the one where everybody knows your name — the bartender slings you the drink you want, and tacks the purchase on your ever-growing tab. It’s understood that the money will eventually change hands; most likely by the end of the night, you’ll break out the wallet and assess the damage.
In its Card Case application [1] software update launched on Wednesday, mobile payments start-up Square takes the scenario one step further. After downloading the Card Case app update on your smartphone, paying for drinks at a business which uses Square’s Register app is as easy as telling the merchant what you want. Make your order, and the money is automatically deducted from your linked credit card account. After the purchase goes through, you’re sent a digital receipt to your account. No swiping plastic, no fumbling for paper money — you don’t even have to take the phone out of your pocket.
“We’re bringing that relationship of being a regular to more and more people than before,” said Square director of product Megan Quinn in an interview. “We’ve removed the artifact of the transaction from the payment experience — instead, it becomes about the relationship between you and the merchant.”
Card Case uses the new “geofencing” technology included in Apple’s recent iOS 5 release. Much like the name suggests, geofencing creates virtual boundaries around specific geographical points. Your iPhone can detect when you cross one of these fences, thereby triggering some form of event or notification.
With Square’s most recent update, merchants who accept Square are bound by geofences with 100 meter perimeters. If you’ve got Card Case and pass through one of those fences, the app automatically opens a “tab,” essentially a way to check in to a business and have your name and payment info show up on the merchant’s Register app (which is also made by Square). Merchants see your open tab through their Register app, and your tab becomes your active account if you decide to visit the store.
First launched in May, the first version of Card Case required users to open the application and manually start a tab when visiting a participating merchant. While Card Case eliminated the need for swiping a card or paying with cash, it still required whipping out your phone, opening a tab and interacting with the application.
Ultimately, the aim seems to be further eliminating the “friction” inherent in the payment process; in other words, it’s becoming way easier for you to spend money without having to think about it.
Theoretically, merchants will love it for the potential increase in revenues behind the counter — especially when customers don’t feel like they’re actually spending money — and customers will dig the quirky convenience of paying for items without really needing to do anything at all.
Obviously, Square has competitors in the mobile payments space. Near Field Communications technology is taking off in a massive way, especially with the debut of Google Wallet and the possibility of Apple developing its own NFC-equipped iPhones.
Square says it isn’t worried about other mobile payments possibilities, instead offering that Card Case is the easiest, most sensible solution out of all the new-wave technologies. “There’s no waving of your phone needed with us,” Quinn said.
In order to make a significant dent in how consumers pay for goods and services beyond traditional paper and plastic, all competitors in the mobile payments ecosystem face an uphill battle. The installation base for NFC-enabled terminals compatible with Google Wallet is relatively minuscule, currently floating in the area of three to four hundred thousand. And Square’s participating user base hovers somewhere in the range of 800,000, though the company refused to offer specific numbers on individual Card Case or Register app installations.
Not to mention shifting consumer behaviors, which center on tried-and-true physical exchanges of legal tender for goods and services rendered. Teaching scores of new customers how to use the new methods — be they Square’s, Google’s or another participant’s offering — isn’t an easy task. Additionally, training programs and infrastructure set up on the merchant side create another barrier to entry that can only be eroded gradually.
Still, Square thinks its option a natural extension of the payment process, far easier to implement and adopt than other alternatives. “It’s bringing that behavior that you already see from the places you go as a regular,” Quinn said. “Once they’ve paid this way, people want to continue to pay this way.”
The updated Card Case app is available in the iTunes App Store immediately, free to download for iPhone users. Alas, Android fans will have to wait — for now, at least. Since the Card Case update is tied to iOS 5’s geofencing capabilities, it’s currently available only for iPhones. The previous version of the app remains available to both Android and iPhone users.
Photo: Jim Merithew/Wired.com
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