For those who choose to forgo cash and credit cards for point of sale payments, there are a plethora of options to choose from today. From standalone payment apps like those offered by Starbucks (easily the most popular) to mobile payment apps or wallets from PayPal, Google, Isis, Apple’s Passbook, Square and more, there are about as many mobile payment methods as there are currencies in the world. And now Square has upped the ante by letting customers pay by text.
While not a new concept (people have been paying for parking, train tickets and more using this method in many parts of the world, often with a discount over traditional payment), Square is probably the highest profile company to jump into the SMS payment space. The added capability to Square Cash makes it possible to send money with just the recipient’s mobile phone number. Previously, you needed an email address to transfer funds, but now both methods are supported. And since most people would have the mobile numbers of people they know in their device, this makes a lot more sense than fumbling around looking for someone’s email.
But be warned that money doesn’t actually change hands over SMS; it actually links accounts using a debit card, so SMS is merely the conveyor of the message that money has been sent or received.
And although not marketed as such, Square Cash doesn’t really make sense as a point of sale payment method. Imagine the line of customers in a shop each having to type in the merchant’s email address or phone number to make a payment! It simply couldn’t happen on a large scale.
The other caveat with Square Cash is that all parties must have an account in order to send and receive funds. If a recipient isn’t signed up, they’ll be prompted to create an account online or through the app, again making it a tough sell in a sales environment.
Another issue that comes up with this type of payment method is security, after all email accounts can be hacked and compromised and mobile phones are lost each and every day.
A bit of good news with Square Cash is that no bank account information is required and all transactions are free. But with rumors abounding that Apple will possibly include an NFC reader in the next iteration of the iPhone, as discussed by Jonathan Jensen, is Square Cash a non-starter?
Whatever Apple does will certainly heavily influence the mobile payment space, but for consumers and merchants alike there are too many options today. We have one-off apps good at one company’s stores; there are more general apps but that only work at merchants with the right point of sale device or technology; and now we have point-to-point sales apps with no fee and no broker or clearinghouse in between.
Maybe we should be making mobile payments simpler, much like cash is today: Everyone in the same country or region has the same currency and it’s accepted everywhere with no questions asked. If mobile payments could actually work like cash, then maybe they will finally replace cash. Apple, are you listening?
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