Square offers hands-free mobile payments

Square claims to be making hands-free digital transactions possible with a revised version of its Card Case app for Apple’s iOS, as it looks to gain an edge in the fast-moving mobile payments space. The app allows users to set up accounts with selected merchants, using geo-location technology to open a digital payment tab once a user is within 100m of a particular shop or restaurant and confirm any purchases verbally in person. The US firm, recently valued at USD1bn, is one of many companies, including Google and PayPal, attempting to broaden the appeal of mobile payments to consumers. With analysts still naming privacy as the main barrier to customer uptake, and mass adoption a number of years away, Square’s latest move could be too much, too soon for wary consumers.

Square claims that it has already signed up 200,000 merchants to the Card Case app in the US, eight weeks after making it available to shops, restaurants and retailers. Whether this will necessarily translate to user uptake, however, remains to be seen.

After a number of withering comments from Square execs over the future of rival NFC “wave and pay” services, this is the firm’s latest effort to diversify its key product offering, branching out from its core plug-in card-swiping device. In a bid to up engagement from both consumer and merchants, Square first rolled out the Card Case in May this year, allowing users to compile digital cards for certain vendors including purchase history, location, contact info and offers. In an updated version, the app uses iOS 5 geofencing technology to detect when the user is within 100m to these vendors, automatically opening a tab for that customer on the merchant’s Square app.

Despite ongoing consumer reservations over mobile payments, Square is steadily gaining traction, claiming to be processing USD4m worth of payments per day and some USD2bn per year. The firm’s COO Keith Rabois claims that the firm’s reach is now 10% of MasterCard and Visa, capping an impressive first year for Square as it looks to close the gap on payments market leader PayPal.

Arguably Square’s closest rival in the space, eBay-owned PayPal, forecasts USD3bn in revenue from various forms of mobile payments in 2011 and says it is processing USD10m worth of payments per day. Although PayPal has traditionally processed payments online, the firm is expanding its payments solutions, including the option of paying via a number of methods such as using their phone numbers and a pin, with items charged to a PayPal-associated account, using a physical PayPal card, or by scanning a barcode.

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