Some time ago there was word that Jack Dorsey, one of the minds behind Blogger and Twitter was working on a consumer payment system for mobile phones codenamed Squirrel. More details have surfaced (allegedly) on his plans: (via)
- the service will be called squareup.com.
- it uses a hardware dongle that attaches through the headphone jack of the phone
- signatures are used on the touchscreen for security validation
It’s a great attempt, and those involved should be lauded for trying to push the industry closer to the dream of an electronic wallet.
Here are some concerns with this sort of implementation – if it’s actually real:
- hardware – Having one more piece of hardware to carry around is likely to push this service in the wrong direction. It’s hard enough to remember headphones, bluetooth accessories and your phone, let alone having another 1/2 inch square piece of plastic in your pocket.
- complexity – this implementation seems to require interaction between the consumer, the POS and their phone. The process appears to be: user puts dongle on phone, says they want to pay with mobile, clerk hits button for tender option, customer waits for amount to show on screen, takes time to sign his signature, hit go, clerk waits for approval and accepts. On first blush this is clumsy and if there are multiple steps errors will be made, and consumers and clerks will get frustrated as it takes too long. As mentioned before, payments of any sort have to be dead simple for them to be successful – particularly in front of the audience of the rest of the people in a queue.
- signature validation – signatures cannot be seen by the clerk, and there is a potential for chargebacks as clients say they didn’t sign for it
- EMV – there is no integration with EMV mentioned – not a problem in US – yet – but it is a problem for the rest of the world
- security – it remains to be seen what stops others from using someone elses stolen phone to access all cards, though there are probably pins involved. If there are pins, its one more step for consumers to pay.
- transaction time – how long does it take for data to be shuffled back and forth – if the payment time isn’t similar to a current electronic payment, it will frustrate users and store staff.
The good news is that this system may get around the prohibitive cost issue of the electronic wallet, with mobile carriers, payment processors, and other parties crowding the payment percentage cut off the top of the payment. If squareup is the sole organization you deal with and they work through the whole payment process, it could remove that major roadblock to the electronic wallet. This is probably not the end product, so let’s hope they work through the items above and pave the way to the electronic wallet!