The early days of ecommerce were filled with old concerns in new contexts, one of which was credit card fraud. Was anyone really sure that a bookstore named after a rain forest was going to securely protect their payment information? eBay was even more of a frontier town for online payments. Third parties allowed credit cards and escrow but most of the transactions took place using 1800s technology: the Post Office money order.
One company had a good thing going however and eBay took notice. The PayPal acquisition gave credit cards on eBay an air of legitimacy and sellers today usually insist on the popular online payment system. With debit card availability, PayPal has become the default method for sending money online, but it isn’t perfect. PayPal, for all its strengths just isn’t very good at casual transactions.
Joining the exclusive club of items that we can’t leave home without, the cellphone is now right up there with wallet and keys. Recent industry talk has the cellphone carriers branching out into banking, with smartphones serving as an alternative to the traditional credit card. We hear about plans to phase out cash at vending machines and stores, which is well and good in a retail environment, but how do you easily repay your friend five bucks without cash?
Venmo, a startup founded by a group of students at the University of Pennsylvania, has a solution. The service lets you associate a bank account with Venmo and send text messages from your phone to send the money to whomever you choose. All you need to send money is the phone number of the person or business you want to pay. If you pick up the bill at a restaurant for your cashless friends, they can just send you a text with the money and have it charge their credit card or draw from their bank account.
What could be the most interesting feature, though obviously limited, is “trusting” your contacts. A trusted contact can withdraw money from your account on their own, without your authorization. If you and a friend often pick up coffee for the other taking $3 each time might be a headache saver if one of you forgets to bring cash to the office. [Ed. this terrifies me]
Another startup working on money management solutions is WePay. Unlike Venmo, WePay is more focused on groups, rather than person to person or person to business transitions. For example, the commissioner of a fantasy sports league could set up an account on WePay and send out an invoice to each member of the league, and everyone puts their payments into one big pot without the worry of hanging onto an envelope of cash or forgetting who paid their dues and who did not. Group money management has a broad audience from school clubs to friends sharing the cost of a party or a few friends all chipping in to buy an item they’ll all share.
This means WePay can also handle donations. Rather than worrying about where the money is stored or hoping people have cash on them at the moment, prospective donors only need to be given a web address to participate from their computer with a credit card.
Jack Dorsey of Twitter fame has gotten into the mix with his latest venture: Square. Square aims to give everyone the ability to simply and cheaply process credit cards by sending out free credit card readers, compatible with the iPhone, iPad and iPod Touch to customers allowing them process transactions anywhere. For everyone from the local hot dog cart to a company selling t-shirts outside s sporting event to a coffee shop that doesn’t need a cash register, Square allows businesses to be mobile and fast on their feet. Not having a storefront doesn’t matter if you can set up shop anywhere your customers are.
One more player is lurking in the shadows are the moment: Facebook. The Facebook Credits system, while currently used for in-game purchases inside of Facebook could become a legitimate virtual currency. With people’s entire social graphs connected to Facebook it wouldn’t be too hard for friends to just swap money in and out of the credit system. If a chunk of the 500 million registered users start using Facebook Credits it might not be long before outside stores start accepting them as well.
Hi,
Just don’t forget another kind of player regarding the payement area : the banks! I’m currently working in a bank and my company proposes since
Oh, no question the banks are in play. ING and Chase (and more) have started to embrace apps, which could quickly jump into this race if they can get the attention of a mainstream audience.
Mike
I have a mobile SAAS application that will allow the user to share their mobile meta data with ANY/ALL “trusted” providers. We use Web standards to deliver contextual user, device and location data to a Web server so businesses can optimize their Web apps for each mobile device and deliver relevant content to mobile customers and employees.
What if:
-In the Future, the Web You Know, Is Based on the Web that Knows You?
-You knew WHO was using the device and what their personal preferences were in real time?
-You knew the devices operational capabilities (WHAT) in real time?
-You knew WHERE they physically were in real time?
-Into your current Web services by adding a few lines of code to an existing script?
-To customize browser menus for each user with just a few lines of HTML?
-Into your business applications using open Web standards?
-Without having to build complex mobile applications?
-For a fraction of the price of a conventional cross platform Mobile solution?
-In a faction of the time to deliver, test and upgrade a traditional Mobile application?
-Didn’t require you to learn anything new?
Reduces customer transactional friction with the 0-1-2-3 Rule:
-Zero behavioral changes
-Single log-on
-Two-Second response time
-3 clicks to relevant content
-Was already available?
-And leveraged your existing programming skills, current infrastructure and was fully standards compliant?
-provides field-level privacy controls for trusted sites and check-box META data sharing.
-provides real-time personal data encryption
ALL with minimal data entry.
Would you be interested????
Love Square! I think it’s a really cool concept and product.
For myself, I’ve been using Sage’s Payment Boss (http://www.paymentboss.com) to collect payments, generate quotes/invoices, and tracking my cash flow. I personally find it more useful for my business model, where I require my quotes/invoices to be tracked together with my payments. But I can definitely see Square being useful for restaurants or at markets.
Full Disclosure: This author has been compensated by Sage.
Square putting the hardware in the hands of consumers and businesses is such a change from the norm that you can’t help but hope they succeed. Or at least nudge the big banks towards the future.