What Square’s Starbucks Deal Means For Mobile Payments And An Apple iWallet


Square scored its big partnership with Starbucks by realizing mobile payments aren't really about mobile payments.
Square scored its big partnership with Starbucks by realizing mobile payments aren't really about mobile payments.

Last week’s announcement that Starbucks is partnering with Square for mobile payments and credit card processing is big news for the nascent U.S. mobile payments market. It was also a warning shot fired by the startup across the bow of traditional payment processing companies, many of which have struggled to bring together an effective and successful digital wallet (or iWallet) solution. The move could also complicate any plans that Apple has to move into that market following the release of iOS 6 and its Passbook feature.

Fast Company’s Sarah Kessler took a look at why Starbucks might have chosen to partner with Square rather than more traditional and established companies including Google, PayPal, and Isis (a consortium formed by Verizon, AT&T, and T-Mobile to develop an NFC-based digital wallet). One of her conclusions is that Starbucks picked Square because both companies are committed to developing a consistent and positive customer experience.

That’s a big deal because it means that Starbucks focused on the customer experience more than on the technical details. This is ultimately what will drive the mobile payment industry – making the experience of mobile payments easier, faster, and better than paying with a credit card or cash.

To put it a bit more simply – mobile payments and digital wallets aren’t really about payments or transactions. They’re about an improved customer experience. That means ease of use, automated reward and loyalty programs, the ability to help users discover new businesses, and ways to simplify and improve the entire shopping experience. Square does this very well and arguably does it better than its competitors.

Apple, of course, places customer experience as its guiding principle when it comes to designing anything – right down to the boxes and packaging for its products. If Apple is planning an iPhone-based digital wallet, the company may find that Square has begun cornering the market. If nothing else, the deal should give Apple some pause about how big Square might be able to get before Apple is ready ship its own payment solution – one that may be very similar in concept and even in design to Square’s.

That brings up on question that all companies with digital wallet ambitions need to face: Will people accept multiple digital wallet apps or solutions? Or will using a mix of options like Square, Tabbedout, PayPal, Google Wallet, Isis, and an Apple iWallet be more hassle than people will accept?

If the answer is that people won’t accept so many payment systems, then it will be up to the mobile payment market, and the companies operating in it, to slim down to just handful of choice options and/or make certain that every system is ubiquitous enough that users won’t need to worry whether or not their mobile payment system of choice will be accepted.

Source: Fast Company

Via: IP Carrier


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