2011.20 | Square = Payments + Filing Cabinet?

Making payments via a mobile phone is not technically difficult.  What is difficult is making those payments as simple and ubiquitous as swiping a payment card at a point of sale.  

I reviewed all of the points needed to make a mobile wallet work 2 years ago, and we’re still waiting for the breakthrough.  (If we finally get NFC on iPhone 4S in September or on a new Blackberry – we may finally get a version of mobile wallet breakthrough courtesy of Apple trying to get a stranglehold on payments leveraging iTunes.)

Solutions like Square are really pushing the envelope, and that is great for the payments and technology industries.  It’s easy to get caught up in every day work and become comfortable and to say some things are just not possible.   

Sometimes it takes a new entrant who actually tries to do something obvious but so monolithic nobody wanted to tackle it to move a solution along.  While Square was originally envisioned as a personal or small business payment system, their latest attempts at installations in a couple of stores in New York City point to them attempting to move this sort of mobile payment system up the food chain to bonafide small businesses.

What is really interesting about the Square solution is not just the payment side, which has been languishing for many years now and will not be solved without bridging the points I made 2 years ago, but another attempt at leveraging e-receipts on the solution.  I have long been a proponent for at least shortening, and ideally eliminating paper receipts.  I pick up dozens of receipts in a week – just buying coffee or a juice, picking up a greeting card; you name it.   Let’s not mention big ticket purchases or the arm length tapes from grocery stores.  I scan significant receipts onto my PC or Evernote for filing and immediately recycle.  Who can keep track of all of the receipts, and is it worth it?  What Square attempts to do is leverage the integration of payment and mobile to keep a wallet full of those receipts on the customer’s mobile device, skipping the scan and file step.  The solution provides a benefit to both customer and retailer.  The customer gets a record of all of their purchases, and the retailer effectively gets a built in loyalty tracking system.  But when you think about it, what’s the benefit of knowing how many coffees or bagels you purchased to a client?  It’s not incredibly helpful.  Keeping the receipts for the last 10 visits to the local superstore where I bought a pair of pants that don’t fit my daughter that I need to return- that is much more helpful. 

So how do you get a receipt repository that would scale?  There are certainly a number of e-receipt solutions out there.  The problem is around getting some level of scale and a common platform people will use and trust. 

My contention is that the organizations best positioned to do such a thing would be the credit card companies.  The credit card companies are well known, and trusted with financial data.   The data for the transaction total is already passed to them and their servers.  It would be challenging, but much less difficult to add a transaction number or details to the data string sent back to the credit card company via the payment terminals.  While not all clients would use such a service, even a percentage of customer using e-receipts should drive significant cost savings in paper usage and returns fraud.  Given all of the negative press around credit card processors, expanding their business in a new direction to drive revenue from either retailers or consumers for a useful service.

Moving to a receipt free society is a significant challenge, but at least some organizations are trying.  The cash registers (ECR’s in fact) are not gone from the stores where Square is being tested and the first attempts at using were not very smooth – after all it’s a new technology and we should hesitate to trust cellular coverage so deeply to complete a transaction at present.  The wallet as receipt holder is still not there yet, and there are many, many operational hurdles that I haven’t even mentioned, but it continues to become more and more realistic to imagine.

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