So are you one of those people who have been keeping up with all of the attempts to replace credit cards and wallets with smart phones? Considering the press behind Google Wallet and other efforts from a consortium of credit card companies, most people have at least heard of it. The economic benefits of handling lots of new payments for lots of new customers would be gigantic, so it’s really no wonder that Google is trying to get into the business and the credit card companies are getting together to protect their markets. Most recent attempts to introduce alternative payment systems have centered around a technology known as “Near Field Communication” or NFC. This type of alternative would rely on manufacturers to add another radio into the phones and on vendors being willing to purchase new NFC-enabled hardware for their card-swipe machine. Actually, in the worst case, if your machine is old and can’t be upgraded, you’d be forced to buy a whole new machine.
The problems with this approach are on both sides of the transaction. Vendors already hate credit card companies with a passion. Their fees are expensive and unless you are an expert, they are impossible to decipher and predict. You get charged for stuff that you have absolutely no visibility to and everyone hates that -it’s like taking the credit card companies’ word for it that they’re being honest – yeah right! Vendors are regularly forced to buy new equipment and this would seem like just another new machine to buy with no visible benefit (well, some, but more on that later). On the consumer side of the transaction, the problem is that there’s really no incentive to adopt this new technology. So you have a new way to pay for (some) things. Who cares? For the foreseeable I still have to carry my wallet and other than a few new ways to keep track of transactions, it doesn’t offer me much.
CardCase is the first alternative payment system I’ve ever heard of that is really a viable alternative. CardCase is offered by Square, the company who sells the little square card readers that you can attach to an iPhone, iPad or Android phone to accept credit card payments. CardCase is an app that you can download to your iPhone or Android Phone that will allow you to pay by just saying your name. Honestly. The short version is that your phone, which stays in your pocket, will notify the CardCase-accepting vendor that you are in the store. Then, when you show up at the checkout, you just identify yourself and the clerk with an iPad sees your name and face come up on the screen and they verify the purchase right there, which charges your card and off you go. The customer gets an easy payment system, maybe even a customized experience including coupons, and the vendor gets charged the standard 2.75 percent that Square charges (which is much cheaper than most fees). Also, the vendor gets to know who you are, they get to advertise in the app on your phone as an available vendor who accepts CardCase, and they can even get to know you and your purchasing patterns. Gold!
This offers some huge benefits for the vendors as well as for the customers and the real killer is that it offers the biggest benefits to the first movers. Can you imagine being the first coffee shop in the city to offer something like this? Tie in some coupons for adopters and start keeping track of who comes in and the other coffee shops will be wondering why everyone is going to you. Once vendors realize what is happening, they will be tripping over themselves to offer this. I wonder if there’s an API for the service so that vendors can offer their own custom apps to really drive loyalty?