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Techmuse: Retail Payment Processing

July 11, 2011

Back in 2003 I spent five days during the summer in Estonia, learning how the government there was working to deliver services electronically. We had meetings with their cabinet, seeing how all of their work was available online, conducted in real time, with lawmakers who worked on their internet access point laws, and with a wide variety of technology providers. One item stood out to be, which was that Estonians could use their cell phones (cell phones of 2003, so no smartphones), to pay for parking and even in a few cases, pay their bar tab. This blew my mind, and since then I’ve been looking for interesting ways to pay for things.

Last winter, Old Navy announced it was going to pilot an ipod based payment system. Basically, picture what you are doing in the Apple store, but at Old Navy, when you check out. Now, at an Apple store, it’s basically brilliant – they have no “registers”, you talk to someone and there you go – you can get help, be directed to technical support, talk about stuff to buy, decide, and buy, all with the same person or being easily directed. Apple has some advantages because they make their equipment, run their own stores, make their main software, and service everything – so its very easy to package all that in one store. I found the old navy idea interesting because it could start changing how a retail store handled and presented points of sale. If you don’t need a stable register, would old navy use roving clothing experts with iPods? Certainly, taken far enough, you free up employees who used to be stuck at a register to move, so you can start setting up your store with more of a focus on having direct employee to customer contact while a clothing choice is being made. I have no idea how this pilot went, however.

Finally, the last few weeks and months have brought about significant movement on payment processing. The first that I noticed was the release of a new Square product. Square is a company that developed a small, portable, square credit card reader to plug into your iPhone, and an app to handle the processing. From what I understand, Square charged 2.5% a transaction, which I believe is highly competitive with most cc processors. It’s small, easy to use, and great for people setting up booths are farmers markets/flea markets, etc. However, Square has just released Sqaure Register and Square Card Case and I am fascinated by both. Square register is a more robust version of the Square software, running on an ipad. It lets you set up menus, have people sign their payments on the ipad itself, accept cash, and do all sorts of analytics (how much of each item do you sell, etc, etc). Of course, it uses the  Square credit card swiper to do that portion of it, so you are integrating with their other project. One aspect of Square Register feeds into Square Card Case – Tabs. You set up a tab at a store – basically, pay from this CC/account. Then, when you go to the store, you make your order, ask them to put it on your tab, and it automatically pays for the order. Square Register then sends the receipt to you (similar to those e-mailed apple store receipts). At participating locations, you can get an app to set up Card Case for your phone, which allows you to browse the updated menus that the Square Register using stores have, find restaurants based on your location, and keep track of all your receipts.

I really think we’ll see more movement towards this kind of paying – Google eWallet is another example of this developing. Jack Dorsey, CEO of Twitter, is the man behind Square, so there is definitely some big support there. It will be interesting to see how the marketplace shakes out – and if companies like PayPal jump in. Square just went through and received about 100 million in investment financing – so at least some people believe in the company.

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3 Comments leave one →
  1. Jeremy permalink
    July 12, 2011 4:28 pm

    The problem I see with the roaming clerk that does it all as opposed to cashiers in a designated spot is pretty simple. I do not want to have to search out and flag down an employee. This employee, since completing the payment transaction is not his/her primary purpose, will inevitably try to engage me on other topics, like upgrading my system, purchasing a tie to go with the jacket, etc. I most emphatically do not want this. When shopping, I wish to be left completely alone to browse until I decide that I need assistance. I am quite willing at that point to in search of either a roaming clerk or a designated customer service desk. Also good: at either service desk or cashier, I stand in a line and know exactly how many customers are between me and the employee I need. I feel like a roaming clerk could take off to some other part of the store when helping some other customer, and since I was waiting nearby to purchase a jacket, will now have to follow this pair across the store to be sure I still get this employee next.

    • July 13, 2011 4:04 pm

      So, I guess there are a few things here.

      Key two points with the Apple model 1. most of the time, they have someone at the door, who will help direct you to what you need, if you need someone – a customer service rep, someone in tech support, etc. 2. However, if you say you don’t need help – you WILL NOT get bugged beyond the normal “can I help you with anything?” kind of comment. My last time I was in the store I wanted to browse before I fixed things, and walked around for about 20 minutes with no issue at all. Decided I was done, got the organizers attention, and started moving through what I needed to do (very fast, btw). On the roving clerk issue and paying – This is true – but it would only work if you have multiple people fulfilling the role – partially mitigating that concern, I would think.

      I’m surprised – with your love of all things old, getting people out from behind the cashier desk really makes it easier to create a more “bespoke” type feel in clothing stores, for instance.

  2. John permalink
    July 14, 2011 9:26 am

    There’s an interesting security path here. In the short term I’m sure they will botch implementations and people will find ways to steal your credit card number through this.

    In the middle to long run, this might be a much needed step away from the current credit card system. Under the current system, to perform a transaction I have to give you all of the information that you would need to steal from me. That is not a reasonable system to use at this point. We have technological solutions that provide authentication, integrity and non-repudiation. If I send an email, I have all of these things (plus confidentiality to boot). It is ridiculous that we don’t have that on financial transactions.

    In the long run I think this functionality should be performed on a bespoke chip. For a few cents you can make a chip that just does the processes needed, and has your secret information hard coded in. I’ve always thought that this would then be embedded into a credit card, but maybe I was being too conservative in my outlook. Being able to pop that into your smart phone (maybe even on the same simcard you use for phone service), would be a lot easier than figuring out how to integrate it into cards and be sure that every store can read those cards.

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