We’re big proponents of cashless transactions, and the ability to supplement plastic credit cards with wireless payment options is more available now than ever before. Enabling mobile payments offers benefits to businesses and customers alike, through low transaction fees, flexible financial card use and a quick-and-easy purchase experience.

If you’re paying attention to mobile payments, you’ve more than likely heard about Starbucks’ partnership with Square enabling purchases via smart phones.  According to Square’s website, Starbucks customers can start using the free Pay with Square app this fall to make purchases at participating Starbucks locations nationwide.

How does Square compare to Intuit GoPayment, PayAnywhere and VeriFone SAIL?  Like its competitors, Square’s primary product is a card reader that can be attached to smart phones to enable credit card payments anytime, anywhere.  They all offer free associated apps, accept Visa, Mastercard, American Express and Discover cards and offer varying low transaction fees.

Square’s point of difference comes through in the simplicity of its Pay with Square app designed for customers.  To use it at Starbucks, customers just download the app to an iPhone or Android device, upload a photo and enter their credit card information.   When they stop by their local Starbucks and order a latte (or my usual, a large dark roast), they show the cashier the app’s barcode on their phone and voila!  They just paid for their $4.00 cup of coffee without having to carry a wallet.

Pay with Square also enables businesses to offer customers the option of telling the cashier their name in lieu of showing a barcode.  The customer’s name and photo appear on the register to confirm your sale – sans credit card or mobile device for a truly seamless purchase experience.   Starbucks is offering only the barcode mobile wallet option because of its ease of integration with their existing POS system.

With the new wave of convenience that Pay with Square offers, concerns around security abound.  For a payment to be truly secure, multi-factor authentication is required which involves a combination of a password, PIN or photo. Pay with Square does ask for a user password to access the app. A photo is required only IF you want to use the automatic tab feature. However, it is up to the cashier to verify the customer’s identity and on a typical busy morning, this could prove challenging. According to an interview with Square creator and CEO Jack Dorsey, Square won’t be adding additional layers of security for the Starbucks transactions. However, the company will be working to integrate the United Kingdom’s Chip and PIN EVM smart card technology as that standard for mobile payments makes its way here to the United States, and as Square makes its way overseas.

This may be acceptable for $4.00 coffee purchases, but will it work for larger purchases at other retail locations like department stores or big box stores? This remains to be seen. In the meantime, the Starbucks/Square endeavor is sure to serve as a case study for other companies to learn from.

Have you considered trying the Pay with Square mobile wallet app? Share your experience with a comment!

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