Mobile Transactions on your iPhone As a Business or a Consumer

The holy grail of mobile commerce has been the ability to transact from any location and to conduct business at any time. With the introduction of Apple’s first revolutionary iPhone and as a result of the rapid evolution of the mobile eco-system, a lot has happened since 2007.

While m-commerce has been an elusive business model for companies involved in this part of the industry, the idea of consumer mobile transactions still remains elusive.   Times are slowly changing even though mobile transactions have been discussed as an industry oportunity since 2000. Beyond the difficult learning curves and actual functionality of devices pre-iPhone, the momentum for this type of transaction has been hampered by the early experiences in online commerce specific to phishing scams, identity theft and economic loss.  While the threats online commerce continue, the early great fears have virtually evaporated since Black Friday and Cyber Monday 2010 confirmed to media, businesses and the American consumer — online transactions are  cool, convenient, safe, and fast. Further, Americans have found that beating the rush of holiday crowds is becoming the new past-time in America.

Discussions about mobile and mobile commerce has been something of a pipe dream for close to 10 years at a time when dot-com ideas could raise your a bundle of dumb money to finance the business.  While there are signs of a repeat with mobile and social media type companies, the hoopla and excitement seems to be more controlled, more diplomatic, and far more realistic.

Before 2010, any business attempting to enter the m-commerce space spend a great deal of time building ideas with telecom providers and banks as partners. Given that telecom and banking are considered two highly risk-averse technology sectors, it is no surprise that m-commerce never really took off or became an innovative sandbox for new mobile payment solutions to help business sell or help consumers buy.  Even established players like Paypal have had many failed attempts with m-commerce that led to extremely low adoption or use.  For example, in 2006, Paypal launched Paypal Mobile based on a ‘Text to Buy’ concept.  Primarily targeted to consumers, this product allowed consumers to buy books ‘online’ from their feature phone with the ability to text a transaction request with a unique code.  While this was a good early attempt by Paypal, it never really took off.  After the launch of iPhone in 2007, Paypal Mobile evolved and introduced an iPhone app to allow consumers to send money to friends, to manage their online account, to send money as gifts, to collect money for a group gift or simply to repay a friend for FREE.  But with its December 2010 iPhone app release, Paypal still provided no ability to transact through the iPhone to buy goods or services wirelessly. While Paypal’s iPhone app was useful for consumers to send/collect money, a business option for small retailers simply did not exist. Similarly, a Canadian company called Zoompass launched commercially in Canada in a partnership Bell, Fido, Rogers, Telus, PC Mobile, Virgin Mobile Canada, and Solo Mobile to offer a comparable  app experience with similar functionality such as Paypal Mobile – designed for consumers to send or receive money but not to transact.

For small retailers that generate a lower volume of sales versus big box retail,  the stark reality is that they are limited to physical, real-world merchant account systems in the retail world to conduct business – a process that can be lengthy and costly with setup and per use transaction fees.  Definitely not a great outcome for free enterprise.  Part of the friction or delay in reaching critical mass with m-commerce has always been one of technology where the device or devices needed time to reach critical mass and be functional and easy-to-use over wireless data networks.  Pre-iPhone back in 2007, the only people who actually ‘surfed’ the Internet from their phone were pimpled-faced male teens, uber geeks and the select few geeker girls.  With the iPhone’s landslide entry into the real world and fast adoption in the consumer space, the ideal of an always-on mass consumer met reality by the end of 2008.  By this time, consumers had become extremely familiar with a richer, more interactive Internet on their iPhone thanks to Apple’s industry-shifting approach to user experience and design.

In early 2010, Twitter co-founder Jack Dorsey with his partner launched Square (www.squareup.com), a unique private pilot which was limited to 50,000 users.  The beta launch turned public in late 2010.  Square was a different m-commerce solution int that it initially turned any iPhone into a mobile cash register.  Since the pilot and iPhone app release, Square has released apps for iPad and Android to achieve market scale and reach with consumers in time for their commercial product launch.

In a very short pilot, Square successfully reach an early milestone of being able to process ‘millions of dollars in mobile transactions’ everywhere.  PayPal, an online e-commerce transaction platform, never really tackled the ‘offline transaction’ space because its core competency was online in the eyes of consumers versus merchant terminal processes in the physical world.  As such, Square was able to target a niche with a compelling new m-commerce solution.  And guess where they found the greatest traction?  With small business, independent workers (consultants) and merchants who probably could not afford the more expensive fees of established credit card terminal vendors.

The Square solution is not only cost-effective but simple.  Anyone in the US can participate as of this writing in December 2010. Simply sign-up at Squareup.com, then download the app onto your iPhone, iPad or Android device.  Upon sign-up, you are a sent a cube-shaped dongle that plugs into your earphone.  With Square, there are no merchant accounts, subscriptions or minimum monthly subscriptions. Square simply charges a small per-transaction fee like Paypal and is less than 3%.  For small business, the transactions are paperless and receipts can be sent by email to customers.  Square’s mobile transaction platform is a boon for charity organizations who may be active at events or other public settings because they would love to tap into into the lost opportunities of day’s past when potential donations walked away from an event without ever contributing.

With the success of this early pilot, other technology vendors are smelling the profit opportunities in the m-commerce field.  And this has not gone unnoticed with Paypal who signed a deal with Verifone to enter the market with yet another solution.  With m-commerce finally hitting pay-dirt with an easy-to-use seamless solution, it may become commonplace to the point where small, independent business no longer has to wait for an invoice to be paid in 30 or 60 days — they can simply tell their client to ‘Square-up’ with a credit card on their iPhone.