Has Square Already Won America's Mobile Payments Race?

Posted by Barry Silverstein on November 15, 2012 12:06 PM

Back in January 2011, Starbucks became the first national retailer to offer its own mobile payment technology combined with a loyalty program. It led to more than 100 million mobile transactions occurring in its U.S. stores since the launch.

Now, in a move to push mobile commerce even further, Starbucks is accepting payments in some 7,000 retail locations via Square, Twitter co-founder Jack Dorsey's mobile payment app for iOS and Android smartphones. In addition to laying out cash for that latte, users of Square Wallet can browse menu information and store hours, gain access to their transaction history, and even explore nearby businesses. Since Square Wallet is linked to a debit or credit card, there's never a need to reload a balance, and a digital receipt appears instantly.

It's not only been a huge boost for the Square brand (as Dorsey tweeted, "Immensely proud of the teams at Square and Starbucks: 7,000 stores launched 3 months TO THE DAY after signing the deal. #nailedit"). The announcement by Starbucks seems to come at a time of increased activity that could make 2013 the year of mass adoption of mobile payment technology. Indeed, Dorsey this week announced that "Square is now facilitating over $10 billion of commerce annually for small businesses across the US. Up $2 billion in just 2 months."

Mobile payments aren't just taking off in the US, of course. Apple, for instance, just inked a deal with London's Heathrow airport to use its new Passbook app so travelers could shop and collect rewards points with their iPhones. But you can be sure that Square's blazing-fast growth is being closely watched in its home country, particularly by the big financial brands already in the payments business. So in early December, Bank of America will release "Mobile Pay on Demand," a small business solution that will turn a client's smartphone or iPad into a mobile point-of-sale terminal. Mobile Pay on Demand, competing directly with Square's mobile payment platform, will include a free mobile app, free secure card reader, and no monthly or annual fees.

Visa's version of a digital wallet, V.me, has completed its beta testing and is being released with over 50 banking institutions as users, including PNC Bank, the first U.S. banking partner to launch the service. V.me will support all major credit cards, not just Visa. According to TechCrunch, "The idea is that a consumer can load up their cards into V.me, the use the V.me checkout option in lieu of filling out multiple forms when online shopping." Jennifer Schulz, global head of eCommerce for Visa, says V.me will be rolled out internationally and on point-of-sale terminals early next year.

MasterCard is testing its own hybrid payment system in conjunction with Dutch banking group ING, reports NFC World. The publication says the system "is designed to offer the same user experience — and the same level of security — whether a shopper is presenting a merchant with a physical card or making a remote ecommerce or mcommerce transaction." AT&T Mobility, T-Mobile, and Verizon Wireless customers in Austin, Texas and Salt Lake City, Utah can now purchase "Isis-ready" phones for contactless payments in Austin, Texas, and Salt Lake City, Utah. Isis is being closely watched as it's not only a joint venture among America's three biggest carriers around a mobile wallet app, but a major US test of NFC. Not unlike V.me, users can load an approved credit card or an Isis cash card into the wallet to make mobile payments.

While many digital wallets will soon be ready for prime time, the big question remains: Are consumers ready to close their traditional wallets and open digital ones? And which brands will they trust to enable that? Tell us what you think in the comments.