With the news that Starbucks and Square have inked a partnership it appears mobile payments are finally going mainstream.
Square is a service for iPhone and Android users that eliminates the need for paying with a physical credit card. Users can open a tab, or set the app to automatically open a tab, at a retailer. The consumer’s phone can then be recognized by the store and allow for automatic payments. At the checkout, cashiers validate a visitor’s identity by viewing their name and photo which automatically appear on registers. Other Square features include: discounts, tipping and loyalty programs.
Square utilizes a little known technology called geo-fencing which creates virtual perimeters around a retailer. If someone is within that perimeter with a supported device then a transaction can take place.
Many observers believed Near field communication (NFC) would be required for mobile payments to be successful. But the lack of NFC in smartphones and the cost of updating point-of-sale equipment has slowed the march towards mobile payments in the United States.
Until yesterday’s announcement, businesses using Pay with Square were local, non-chain stores. The addition of Starbucks adds not only significant income for Square, but also mainstream awareness. But will it translate to mainstream adoption?
Surprisingly, the announcement has detailed that the location recognition functionality will not be available and that the Starbucks loyalty program will remain separate. This incomplete experience with Square may result in additional consumer confusion.
If Starbucks and Square can clearly communicate this change in payment philosophy to customers and geo-fencing works as advertised, mainstream mobile payment may finally become common practice in the United States.
Image from Geolocation