If you imagined that, in the future, you could just walk into a store, take a product, and say your name to the cashier to pay for it, you're correct. Except that the future is now.
On Wednesday, San Francisco-based start-up Square announced an update to its Card Case app for iPhone 4 and 4S. Users who have the updated app on those model smartphones, as well as the new iOS 5, can leave their phone in their pocket, wallet, or purse, along with their old-fashioned plastic credit cards, and simply pay by saying who they are at the register.
About 20,000 retailers now have the ability to accept Card Case payments.
With iOS 5, the Card Case app can determine when the smartphone is 100 meters or closer to a participating merchant. When nearby, the app automatically opens an "automatic tab" in that user's name at the register, which also displays a photo of the would-be .
At that point, the user simply needs to identify themselves. After the sale is made, the confirmation is sent to the iPhone. The app currently only supports those specific iPhones with iOS 5, but Square said that it intends to include the functionality in an update for its app on Android devices.
Square is a fast-growing company whose aim is to revolutionize in-person e-payments. Its first product was a small credit card reader that attached to an iPhone's headphone jack, allowing a merchant to accept credit cards and debit cards. The company says it has shipped about 800,000 readers.
A Little Too Friction-Less?
Michael Gartenberg, research director at Gartner, said that "merchants will love this, since they love anything that makes buying as friction-free as possible."
But, Gartenberg added, it "will probably take some time to evangelize the virtues of this to customers." To many customers, he said, plastic credit cards are not such a burden that this solves a big problem, and there may be some customers who will find this a "little too friction-less," in that it all feels too intangible.
Launched in late 2009 by Jim McKelvey and Twitter creator Jack Dorsey, Square has reportedly received $100 million in venture funding and may be valued as high as $1 billion.
Card Case's solution is the latest development in the smartphone-based, e-payment movement, which includes devices with embedded near-field communication (NFC) technology.
In the Spring, Google launched its Google Wallet program, which uses NFC technology to allow payment by tapping or waving an enabled smartphone against or near a special terminal.
Aside from simplifying purchasing and inspiring impulse buying, such new forms of e-payment could to a wealth of new data for retailers on the buying habits of their customers. Google's system, for instance, allows retailers to issue offers as potential customers approach the store, and then to track the success of specific approaches.