Square deal with Starbucks highlights Apple's push to deliver Passbook in iOS 6

Posted:
in iPhone edited January 2014
The partnership announced between Starbucks and credit card processing service Square underscores the potential demand for mobile device payments, lending some light into why Apple is promoting its new Passbook app as a key feature in iOS 6.

Square, co-founded by Twitter creator Jack Dorsey, was developed as a company to enable small business users to accept credit card payments.

The startup was originally based around a small hardware peripheral for reading magnetic strips on credit cards that plugged into the audio jack of iOS or Android devices. The device purposely avoided using USB or Bluetooth to skirt Apple's licensing rules that ask for a cut of transactions.

By plugging into the audio port, Square can deliver card reader data to the company's app as analog audio signals, exempting itself from Apple's fees and therefore offering small merchants the lowest transactions fees possible.

This spring, the company introduced Pay with Square and Square Register (shown below) features that enable customers to set up a tab with participating merchants and make payments via a barcode on their mobile device, or even just their name.



What Starbucks means for Square

Starbuck's vast global operations obviously has no need to rely upon Square for transactions, but the highly publicized partnership will give Square a lot of visibility and a large volume of transactions while also providing Square with a very popular merchant to accept its digital transactions.

According to a report by SplatF writer Dan Frommer, the deal won't install Square's mobile-based card readers or its iPad-based register offering; Starbucks will continue to use its existing card reading point of sale infrastructure.

Starbucks, says Frommer, is likely partnering with Square "to lap its competitors in customer experience and technology the way Apple has in electronics retail and Nike has in shoes," noting that Square has demonstrated "a particular focus on the customer experience that most other payments and software companies see as an afterthought."

Apple eyes digital payments with Passbook

Starbucks' chief executive Howard Schultz noted that around a million people each week are now paying for their lattes and Frappuccinos via their mobile device, accounting for about 2 percent of the chain's transactions. That indicates mobile purchases are already significant, but also have tremendous potential for growth.



Like Starbucks, Apple has also been keenly watching mobile payments. This started within its own retail stores before the iPhone with third party, mobile point of sale devices, and has since moved to use the company's own iPod touch paired with a barcode and card stripe reader.

Apple has also expanded its transaction experiments to include mobile prepayments and register-free "anywhere in the store" transactions, something that Starbucks's CEO described as "highly complicated" and not well suited to Starbucks' food and drink business.

In iOS 6, Apple will introduce Passbook, a new app that enables merchants and ticket sellers to generate live, digitally signed electronic passes that are stored in a "digital wallet" app.

Existing merchants, like Starbucks, which already generate and accept barcode app-based payments can push their passes (and updates) to the Passbook app, creating a central repository for boarding passes, event tickets, retail coupons, gift certificates and loyalty cards.

In speaking with analysts, Apple's chief executive Tim Cook described Passbook as "an important feature of iOS 6," but added, "I wouldn't want to speculate about where it might take us," when asked for more detail on how the company plans to expand its digital wallet strategy in the future.
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Comments

  • Reply 1 of 33
    waverunnrwaverunnr Posts: 120member


    When I got my first MAC (Money Access Card) card, I saw a future without cash.  And that future was bright.


     


    Looks like we're definitely on our way...

  • Reply 2 of 33
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by Waverunnr View Post


    When I got my first MAC (Money Access Card) card, I saw a future without cash.  And that future was bright.


     


    Looks like we're definitely on our way...



    Until private individuals can pay each other with plastic, cash is not going anywhere. The new Chase TV ads are interesting because they show that Chase customers can pay one another, such as splitting the bill for lunch, however, until anyone can pay anyone else, even on a different bank, you are either going to have to use PayPal, check or cash. Plastic is already pretty easy at most stores. I don't really see how the phone is much different. You are still going to have your wallet for the foreseeable future even if it is just for your drivers license. At my data center for example, in order to enter the server area you have to give up your drivers license in exchange of the badge that opens the security doors. Also I don't think the police are ready to accept digital images of the license if they stop you. They generally take the license back to their vehicle. You probably don't want to give them your phone and they probably wouldn't accept it.

  • Reply 3 of 33
    solipsismxsolipsismx Posts: 19,566member
    I see nothing that Square does that Apple can't do and doesn't already have access to with their iTS accounts. I expect to see something with the next iPhone that furthers this initiative.

    mstone wrote: »
    Until private individuals can pay each other with plastic, cash is not going anywhere.

    Marty McFly: Hey, Doc, we better back up. We don't have enough road to get up to 88.
    Dr. Emmett Brown: Roads? Where we're going, we don't need roads.

    In case my comment is too ambiguous. When this change happens we won't be use plastic cards to exchange money with each other.
  • Reply 4 of 33
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by SolipsismX View Post



    I see nothing that Square does that Apple can't do and doesn't already have access to with their iTS accounts. I expect to see something with the next iPhone that furthers this initiative.

    Marty McFly: Hey, Doc, we better back up. We don't have enough road to get up to 88.

    Dr. Emmett Brown: Roads? Where we're going, we don't need roads.

    In case my comment is too ambiguous. When this change happens we won't be use plastic cards to exchange money with other.


    Sure I could have chosen another term, but "plastic" really just refers to an account #. Maybe a program like Bump where you set the amount to be paid and just bump the two phone together.

  • Reply 5 of 33
    moxommoxom Posts: 325member
    solipsismx wrote: »
    When this change happens we won't be use plastic cards to exchange money with other.

    Greenpeace still won't be happy...
  • Reply 6 of 33
    solipsismxsolipsismx Posts: 19,566member
    mstone wrote: »
    Sure I could have chosen another term, but "plastic" really just refers to an account #. Maybe a program like Bump where you set the amount to be paid and just bump the two phone together.

    The bumping is technically pointless, but I know what you mean. If you have two devices that both send and receive NFC data for payments — I'm not sure if NFC protocols are designed to be omni-directional for security reasons — then you could use that (or just use a service like PayPal). You store your account info on your phone (like you'd do in your wallet) or on a secure server that acts as intermediary (like you do with iTunes). You then just need to offer up a passcode to initiate the transfer (like with a debit card).

    All the pieces are here it's mostly the consumer and business cultures that need to see the change as being positive. Remember when Amazon and eBay first took off? People were skeptical about buying things online. Banking, too. Nowadays I don't know many people who don't do all their banking online.
  • Reply 7 of 33
    alfiejralfiejr Posts: 1,524member


    i get that Passbook will be useful for pre-paid/subscription items. that could come in handy a lot. Expedia, for example, could load your iPhone with the info for all your already-paid internary transactions - flight, hotel, car, tours, etc - that saves you lots of time for check in and so on. not to mention all those coupon and event ticket services. and gift cards, like Starbucks.


     


    but i don't get what Square has to do with this.

  • Reply 8 of 33

    Quote:

    Originally Posted by SolipsismX View Post





    In case my comment is too ambiguous. When this change happens we won't be use plastic cards to exchange money with other.


     


    You mean "with one another."


     


    It will be many, many, many years before plastic cards go away entirely..if ever.


     


    Furthermore, I am quite sure we will hear many security-related horror stories along the way.  I personally will not be using my smartphone for making payments unless I am convinced that my money and information will be secure.

  • Reply 9 of 33
    rodentrodent Posts: 49member
    You all ought to check out ALL the complaints about Square and then voice an opinion.
  • Reply 10 of 33
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by SolipsismX View Post





    The bumping is technically pointless, but I know what you mean. If you have two devices that both send and receive NFC data for payments — I'm not sure if NFC protocols are designed to be omni-directional for security reasons — then you could use that (or just use a service like PayPal). You store your account info on your phone (like you'd do in your wallet) or on a secure server that acts as intermediary (like you do with iTunes). You then just need to offer up a passcode to initiate the transfer (like with a debit card).

    All the pieces are here it's mostly the consumer and business cultures that need to see the change as being positive. Remember when Amazon and eBay first took off? People were skeptical about buying things online. Banking, too. Nowadays I don't know many people who don't do all their banking online.


    Yes but not everyone has a PayPal account. Whatever method you use it has to replace the legal tender part of personal transactions. Remember, I'm not talking about commercial entities that have merchant accounts. Unfortunately the banks do not want private individuals to have this capability. The reason Chase can offer it it that it only works Chase to Chase where they control the transaction from end to end. Less chance of something going wrong or being hacked. The banks have a certain responsibility to protect your credit card account as well as your other accounts. They trust institutions as they have been vetted by the merchant payment processing requirements, but private individuals are not trusted so two way electronic payments are not something the banks are willing to guarantee at this time.

  • Reply 11 of 33
    solipsismxsolipsismx Posts: 19,566member
    applegreen wrote: »
    I personally will not be using my smartphone for making payments unless I am convinced that my money and information will be secure.

    How is cash or a plastic card more secure? If someone has access to your cash it's theres. Good luck remembering the serial numbers on the bills. If someone can see your card they have access to your card number, the verification number on the back, expiration date, your name and your signature. With NFC it's like putting your Debit card into an ATM, you can't get cash out unless you know your PIN. On a phone you can be even more secure by making it a more complex passcode and if you lose your phone it should be locked, encrypted, and it should auto-wipe after x-many attempts to unlock it or by you sending the kill signal via Find My iPhone. You lose your wallet and you don't have any of the securities built in.

    I'm very serous about security. I have a special CC card just for online purchases that I pay off each month. It's also tied to my PayPal account incase I need to store extra funds for a larger purchase. This insulates me from my bank accounts. It's also the card I use for traveling aboard or at a place I think is shady. It's not a high dollar value card but it doesn't matter since I'm protected. Is this perfect? Of course not, but no security is without a severe limitation on usability.

    mstone wrote: »
    Yes but not everyone has a PayPal account.

    I'm not sure why that is relevant. We have various services for using cards like MC and VISA and they aren't all based on accounts with a specific bank like WF or BoA.
    Whatever method you use it has to replace the legal tender part of personal transactions. Remember, I'm not talking about commercial entities that have merchant accounts. Unfortunately the banks do not want private individuals to have this capability. The reason Chase can offer it it that it only works Chase to Chase where they control the transaction from end to end. Less chance of something going wrong or being hacked. The banks have a certain responsibility to protect your credit card account as well as your other accounts. They trust institutions as they have been vetted by the merchant payment processing requirements, but private individuals are not trusted so two way electronic payments are not something the banks are willing to guarantee at this time.

    That's why an intermediary like Apple is perfect for this. MasterCard acknowledges it needs Apple to bring NFC payments into the mainstream, hence my comment about cultural change is a bigger hurdle than the technical one. You can use whatever financial institution setup you want and it'll all go through one of several services. Apple has been doing this for a long time. Do you think that sending your kid an iTS* allowance or gifting an iTS item is any different from using your account to send someone money to their iTS account? There is one bridge to retail that needs to be made and a huge mental change to overcome where people think that a card with all their data printed it is secure.


    * iTS includes all such services like the App Store and even in-store purchases where you can already use your iTS account to buy products at an Apple Store without interacting with employees.
  • Reply 12 of 33


    There will always be a need for cash. The tax man can track electronic transactions far too easily. The black economy will always be there and cash will the oil of that trade. If you want a bargain you don't use a credit card or plastic.  Electronic transactions are to easily to corrupt.  Forging real currency isn't.

  • Reply 13 of 33
    mstonemstone Posts: 11,510member

    Quote:

    Originally Posted by SolipsismX View Post





    How is cash or a plastic card more secure? If someone has access to your cash it's theres. Good luck remembering the serial numbers on the bills. If someone can see your card they have access to your card number, the verification number on the back, expiration date, your name and your signature. With NFC it's like putting your Debit card into an ATM, you can't get cash out unless you know your PIN. On a phone you can be even more secure by making it a more complex passcode and if you lose your phone it should be locked, encrypted, and it should auto-wipe after x-many attempts to unlock it or by you sending the kill signal via Find My iPhone. You lose your wallet and you don't have any of the securities built in.

    I'm very serous about security. I have a special CC card just for online purchases that I pay off each month. It's also tied to my PayPal account incase I need to store extra funds for a larger purchase. This insulates me from my bank accounts. It's also the card I use for traveling aboard or at a place I think is shady. It's not a high dollar value card but it doesn't matter since I'm protected. Is this perfect? Of course not, but no security is without a severe limitation on usability.

    I'm not sure why that is relevant. We have various services for using cards like MC and VISA and they aren't all based on accounts with a specific bank like WF or BoA.

    That's why an intermediary like Apple is perfect for this. MasterCard acknowledges it needs Apple to bring NFC payments into the mainstream, hence my comment about cultural change is a bigger hurdle than the technical one. You can use whatever financial institution setup you want and it'll all go through one of several services. Apple has been doing this for a long time. Do you think that sending your kid an iTS* allowance or gifting an iTS item is any different from using your account to send someone money to their iTS account? There is one bridge to retail that needs to be made and a huge mental change to overcome where people think that a card with all their data printed it is secure.

    * iTS includes all such services like the App Store and even in-store purchases where you can already use your iTS account to buy products at an Apple Store without interacting with employees.


    You keep going on and on about intermediary like have iTunes to process the transaction. I keep reminding you that the original points that I was responding to is that cash will not go away until private individuals can easily exchange money electronically without a PayPal or an intermediary. Take a typical debit card for example. It is tied to a checking account. If I go up to an ATM I can put cash into it and it funds my debit card and it doesn't ask where the cash came from. What I think would be useful is if I could walk up to an ATM along with a private person who owed me money and we each swipe our cards and each put in our respective pin numbers and then the machine allows us to transfer funds from one account to the other. Better yet would be that the cards themselves having smart chips could be programmed using an iPhone to do essentially the same thing. Receive payments from a private individual without cash. Unfortunately today that person has to withdraw the cash first from the ATM and then give it to me and I put it right back into the ATM. If you want to discuss payment systems between an individual and a commercial entity that is a different discussion.

  • Reply 14 of 33
    macinthe408macinthe408 Posts: 1,050member

    Quote:

    Originally Posted by AppleInsider View Post



    The device purposely avoided using USB or Bluetooth to skirt Apple's licensing rules that ask for a cut of transactions. 


     


    Huh? I thought it was so that it could avoid having to pay for the "Works with iPhone" approval stamp. 

  • Reply 15 of 33
    harbingerharbinger Posts: 570member


    Apple should buy Square. Perfect, disruptive entity for digital wallet foray. Starbucks alliance legitimizes it.

  • Reply 16 of 33
    stourquestourque Posts: 354member
    You can make an interac transfer which emails a link for the recipient to follow to retrieve their money. Not quite as simple as handing over cash, but it is the next best thing.
  • Reply 17 of 33

    Quote:

    Originally Posted by SolipsismX View Post





    How is cash or a plastic card more secure? If someone has access to your cash it's theres. Good luck remembering the serial numbers on the bills. If someone can see your card they have access to your card number, the verification number on the back, expiration date, your name and your signature. With NFC it's like putting your Debit card into an ATM, you can't get cash out unless you know your PIN. On a phone you can be even more secure by making it a more complex passcode and if you lose your phone it should be locked, encrypted, and it should auto-wipe after x-many attempts to unlock it or by you sending the kill signal via Find My iPhone.


     


    You are talking nonsense again.  Cash is cash.  It is secure unless you are talking about picking my pocket.  If there are any fraudulent charges on my credit card, I am covered by my card company.  Debit cards I never use because they are tied to bank accounts.  Debit cards don't have the same level of security as credit cards.


     


    As for NFC payments, we just don't have enough experience to feel comfortable that they are secure.

  • Reply 18 of 33
    harbingerharbinger Posts: 570member

    Quote:

    Originally Posted by AppleGreen View Post


     


    You are talking nonsense again.  Cash is cash.  It is secure unless you are talking about picking my pocket. 



    Cash has limitations or credit cards would not exist.


     


    Quote:

    Originally Posted by AppleGreen View Post


     


    If there are any fraudulent charges on my credit card, I am covered by my card company.  Debit cards I never use because they are tied to bank accounts. 



     




    Banks cover fraud on debit card use. You can block recurring transactions at any time. But you may have a hard time blocking some recurring charges on credit cards (remember the fitness club fiasco?)


     


    Quote:

    Originally Posted by AppleGreen View Post


    As for NFC payments, we just don't have enough experience to feel comfortable that they are secure.



    It will be open to fraud at roughly the same rate as credit cards and debit cards.

  • Reply 19 of 33
    harbingerharbinger Posts: 570member

    Quote:

    Originally Posted by Banyan Bruce View Post


    The black economy will always be there and cash will the oil of that trade.



     


    That metaphor doesn't actually make sense

  • Reply 20 of 33
    solipsismxsolipsismx Posts: 19,566member
    applegreen wrote: »
    You are talking nonsense again.  Cash is cash.  It is secure unless you are talking about picking my pocket.  If there are any fraudulent charges on my credit card, I am covered by my card company.  Debit cards I never use because they are tied to bank accounts.  Debit cards don't have the same level of security as credit cards.

    As for NFC payments, we just don't have enough experience to feel comfortable that they are secure.

    So you're either using meaningless tautologies or you're contradicting yourself in your post. Not all currency is the same. If it was then there would be no fear of any digital transaction. You can deny it and wallow in your ludditian fears all you want but we've been steady moving toward more digital transactions for our everyday purchases and it will not stop and until as we know it ceases to exist. Don't be one of those conspiracy theorists that claim online purchases were the End of Days. Learn, understand, and then embrace reality.
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