(Tim Carmody) Thinking about Square, PayPal and other innovators in mobile payments, I keep coming back tosomething JP Morgan Chase’s Jack Stephenson told me: “Consumers don’t really have a mobilepayment problem. Ninety-five percent of the time, paying with cash and credit cards actually works pretty well. Consumers have a mobile shopping problem. There’s a difference.”
So when I read that PayPal’s “Here” will process payments for .05 percent less than Square, will scan personal checks, and has a credit card reader that works the same way, but (as ATD’s John Paczkowski said) looks like something that came out of a Happy Meal, I can’t help but think that the PayPal team is thinking about its entry into mobile payments all wrong.
PayPal is basically just porting its utilitarian model for online payments into meatspace. It’s touting features like its advanced security protocols, because that was the main concern with doing transactions with strangers on eBay more than a decade ago. It doesn’t really address the fundamental security problems still built into all mobile operating systems.
Maybe more importantly, it’s not rethinking the mobile shopping experience as much as it is trying to grab a slice. Fair enough — the market is exploding, plenty of share up for grabs. But Square Register and Card Case strike me as having rethought shopping for both customer and merchant in a much more fundamental way.
“At Square, the phrase we use is improving the experience for ‘both sides of the counter,’” Square COO Keith Rabois told Wired in an interview conducted last week, prior to PayPal’s announcement. “For the merchant, we want to help them grow their business. For the customer, we want to make shopping more delightful. That means doing something beyond just reinventing the credit card. It means creating an emotional layer to the experience.”
That means, in part, an Apple-inspired emphasis on elegant design, from the app to the interaction. Remember, this is shopping. It’s an entire industry built around making buying things fun, intuitive, fast, elegant, enjoyable, beautiful. The POS needs to feel the same way.
Watch the demo video for PayPal Here. Now watch the demo for Square Register. Which point-of-sale setup looks better? Which looks easier and more fun to use, for the customer and the merchant? Which looks like something you would want in a store you owned, or in a store where you enjoyed shopping? It’s Square. Merchants place a premium on that kind of experience. They opt fun over fugly, even if it costs them five-hundredths of one percent more.
On the merchant side, too, Square gets that the real issue isn’t payments, but services built around payments. As an iPad app, Register isn’t just a fancy menu; it gives a business the chance to track serious data about what gets sold and when. It’s about data made accessible. That’s what adds value, and that’s what helps a business grow.
“We can show them the fundamentals of how their business is performing, and even helpful hints on how to optimize that in the future,” said Rabois. “For instance, on rainy days, it might be more effective to lower or raise prices, or to offer coupons to preferred customers.”
This isn’t to downplay the importance of simply being able to accept credit cards or electronic payments. Moving from a cash business alone is huge for growth; Rabois cited figures suggesting businesses who accept credit cards can pull in 15-25% more revenue than those who don’t. But that’s a small, bootstrapping piece in an overall strategy to rethink how we shop.
There’s a mildly-famous presentation Jack Dorsey gave to Square employees in 2011 where Dorsey compares his design-centric vision for mobile payments with the Golden Gate Bridge. David Kirkpatrick wrote about the speech in a profile of Dorsey for Vanity Fair:
“We’re the only payments company in the world that’s concerned with design,” the Prada-clad Dorsey begins. He shows a dramatic photo of the bridge taken from atop one of its towers. “This is what I want to build. This is classy. This is inspiring. This is limitless. Every single aspect of this is gorgeous… So your homework this weekend is to cross this bridge, think about that, and also think about how we take those lessons into doing what we do, which is carry every single transaction in the world.”
Sure, that’s the kind of speech any CEO might give to inspire his or her troops. But it’s also the kind of message that a retailer would be ready to receive, or that a consumer, who’s already blown a sizable chunk of change on a sleek smartphone, would be ready to believe. And that’s the edge Square still has.