Latitude

Mobile Payment, in a Microcosm

Twitter co-founder Jack Dorsey’s Square for mobile payment transactions isn’t anything new. It’s something new in context.

(Well, its technology may be new–an iPhone app with a sleek user interface, purchaser photo identification, email and text receipts, and the ability to accept swipe credit card payments via an audio input jack.)

There’s been some hullabaloo about Square’s target market, or if its business model can even float in the status quo. Mostly people asking if there’s a need for mobile payment services like this. And it is a wonder that they haven’t caught on yet.

The First World Lags in Mobile Banking: Telling?

“Most people there, regardless of wealth or status, have cell phones.”

In countries where mobile penetration has begun to outstrip banking penetration (Kenya, Tanzania, Afghanistan), mobile payment transactions fulfill a distinct need, often with people proving “more willing to trust their mobile operator with their cash than a traditional bank.”

In developed markets, mobile banking is merely an alternate form of payment in an already choice-saturated environment.

The cell phone has come to replace entire institutions: for example, while here in the U.S. we are just starting to pay or make financial transactions using cell phones, this has been a common practice in developing countries for years, cell phone credits sometimes being more valuable than actual currency.

Jorge Vega, “The Bottom of the Pyramid”

So Where’s the Need, Here?

ReadWriteWeb aptly asked if, in Square’s current market, retailers are really looking for an alternative? Discussion unanimously seems to concede the service’s appeal to a motley audience.

RWW commenter Bertil Hatt writes:

I’m pretty sure the fee is a big deal, and will be larger on Square, or at least large enough to turn away most current holders…

On the other side, hookers, drug dealers, musicians, nannies, coach and other at-your-home yoga teachers will probably love the comfort of not carrying cash — and they have margins large enough to value such a service.

The person-to-person appeal is clear, but a bit selective across scenarios (why wouldn’t I just make a cash arrangement, sans fees, if meeting to exchange purchased Craigslist goods?). When feasible, simpler will always be preferable.

The Experience Power of Mobile

In a market where the need isn’t that great for mobile payment services, convenience, transparency, and quality of information could be increased as the value add–if doubt were not so high.

Currently, the mobile Web has three great information advantages (which are mutually conversant): location-aware, real-time, and social aggregation.

Do these apply in any way to qualitatively improve both merchant and customer experiences? Or, better yet, how could they?

Square is well-integrated with the Web, offering a plethora of add-ons to the traditional transaction–but can we really use the extra information, and how?

Mint has enjoyed rampant success because people want to see their financial information improve in transparency and organization. They want to see where they’re spending. (Or, where they’re selling, on the flip-side.)

Square geo-tags the location of your transactions, but we weren’t sure if users could view, sort, or visualize their aggregate history in any meaningful way.

(We do like that Square counts repeat customers’ visitors for merchants–digital coffee card, anyone?–but it seems there’s a lot of unexplored potential here). Along what other useful axes could mobile payment providers’ e-records be captured and organized?

Perhaps as a customer who has an iPhone as well, the merchant could skip that relatively lengthy “enter your email” process and simply “bump” me a receipt, in some fashion?

Square seems to have all the foundations for an experience that offers something more than the same ol’ service wrapped in a novel platform…

Header image courtesy of paddyis1337′s flickr (cc), some rights reserved; oversized quote courtesy of Tom Davis, US soldier (Afghanistan) & TicketStumbler co-founder.