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May 24, 2011 12:43 am
Jack Dorsey, co-founder of Twitter, has waded into the fast-changing mobile payments business with an ambitious attempt to use smartphones and tablet computers to revolutionise how purchases are made inside retail stores.
The move pre-empts a wider industry attempt to change in-store commerce using so-called Near-Field Communications, which use special chips embedded in phones to make payments by simply “waving” a handset over a terminal. A test of the technology was announced in the UK this month, and companies including Apple have looked at using the system.
However, payment industry analysts said Mr Dorsey’s company, Square, was likely to struggle to find wide adoption among retailers, given the complexity of the payments business and the range of technology and services on which most retailers already rely.
Under a service unveiled on Monday, Square said retailers would be able to replace their cash registers and credit card readers with iPads. Consumers who downloaded Square’s smartphone “app” would be able to make payments with one touch from their smartphones, allowing the retailer to complete a purchase on the store’s iPad.
In a conscious attempt to echo Apple’s success in simplifying the process for finding and buying digital music, Mr Dorsey, the lead product designer credited with creating Twitter, said the service would make buying a cup of coffee “as easy as buying a song off iTunes”.
It would be aimed initially at small merchants, but Square had already received interest from larger retailers and was working on a technology interface that would let them link the transaction data to their existing retail systems, he added.
The effort to put more intelligent devices into retail stores, freeing up staff to interact directly with consumers, fits a broader trend, say industry analysts. New mobile point-of-sale technologies such as this “represent a significant opportunity for merchants to skip past some of the infrastructure and support staff out on the floor”, said Brian Walker, an ecommerce analyst at Forrester Research.
However, he and other analysts said retailers would look to existing technology suppliers rather than introduce a new system from scratch.
“It could have a chance, but there’s a well-established market,” said Beth Robertson, an analyst at Javelin Strategy. Companies in the field already provide service and support to merchants, going beyond what Square appeared to be offering, she added.
Analysts questioned whether the idea would appeal to smartphone users . Mr Walker said: “It’s unclear whether consumers would understand it.”
Mr Dorsey said Square had tried to devise an ambitious new mechanism that would seek to replace many aspects of the existing payments ecosystem.
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