Cash, credit or gadget?
For years, payment geeks have promised that cell phones would soon replace the jingle of pocket change, ushering in a utopian world where consumers could buy candy bars from a vending machine with a phone call. Just dial a number on the machine, and -- BANG -- your Juicy Fruits or Fritos drop into the tray.
Those promises never materialized, but worse yet, the value proposition never materialized. More than one analyst has called mobile phone payments a solution in search of a problem. After all, when would dialing a phone number be easier than pulling out a piece of plastic?
All that may have changed this week, as Starbucks announced that it had begun accepting payments made with iPhones and BlackBerrys at most stores. A major retailer leaping into this world with both feet could send a 120-amp charge into electronic wallets -- particularly because the Starbucks "Mobile Card" e-payments is fun, easy, relatively safe and gives consumers a reason to whip out their gadget instead of their wallet.
First, I'll tell you why I was pleasantly surprised with the Starbucks experience. Then I'll tell you why the credit card industry has a lot to fear from mobile payments, and most specifically from Apple.
Regular readers of this column know I like to try everything, but I’m often unimpressed and concerned that gadget-makers regularly ignore practical consumer needs and security issues. I've tried mobile airplane boarding passes, for example, then been embarrassed as haggard TSA agents tried in vain to scan my iPod Touch at the airport security line, causing substantial backups. I expected much the same experience at Starbucks on Wednesday morning, when I took my iPod Touch into a store just hours after the announcement. I fully anticipated I'd be late for work while untrained employees argued with each other about how to use the system.
I was wrong. It was simple.