There’s an App (But No Swipe) for That

New payment systems are waiting for consumer demand and merchant acceptance.

November 1, 2010

I confess: I own an iPhone.

I chose it not because of price (it’s more expensive than a stable of thoroughbreds), nor because it’s a great phone (more “drops” than a Seahawks wide receiver). I selected the iPhone for one reason: It’s the most efficient way ever devised to waste time.

That little $100 a month bundle of joy can load any of thousands of available “apps.” I’m addicted to apps like a Democrat is to tax dollars. I have so many apps it takes at least 10 minutes of furious finger-flicking to find anything.

My wife, who uses a Blackberry, deems the entire process “idiotic,” which is just about all Blackberry users can say, considering they’re using the cell phone equivalent of a Studebaker.

The only thing I enjoy more than a new app is drinking Starbucks coffee. So imagine my joy when I found the “Starbucks Card Mobile” app. This app lets you use your iPhone to purchase drinks—effectively turning your $100 a month communication device into a $1.50 piece of plastic.

“How cool is that?” I asked my wife who, as usual, came back with some witty retort. I immediately hustled down to my neighborhood Starbucks.

It was early in the morning and the line was long—full of busy people. At my turn, I ordered my usual: grande, quad, cappuccino, latte, bravo, omega, epsilon (and somebody said Greek wouldn’t be a useful language).

“Sure,” replied the barista, “That’ll be $4.35.”

With much smugness, I whipped out my phone and…started looking.

“Sir? That’ll be $4.35,” she repeated.

“Hang on, just need to find my card…It’s either on page six or page eight. Or maybe 11. Hmm….”

After what seemed like an eternity, I found it. “Aha!”

“Sir? What are you doing?” asked the server, as I began waving the phone around the cash register, as if attempting to exorcise demons from the till.

“I have your new card app and…”

“I’m sorry, but we don’t accept that here.”

My arm stopped in midmovement. “You don’t….This is a Starbucks, right?”

“Yes sir, but we only accept that in a few stores. We don’t have the special reader it needs.”

I was about to protest when a nice, burly gentleman offered to enhance my spinal alignment if I didn’t get moving.

It was humbling, but the experience taught me:

  • A plastic card is the modern equivalent of a scroll. It has no intelligence and no ability to be modified, changed, or updated. Plastic cards as we know them will be replaced. It’s not a matter of if but when. Someday (perhaps soon) plastic debit/credit cards will be regarded as “quaint.”
  • The classic chicken-and-egg metaphor applies: Until merchants accept new-generation payment devices, nobody will make them. And merchants won’t spend infrastructure dollars on technology that isn’t in great demand by consumers.

Until then, I’ll be at Apple’s iTunes application store, looking for the next, big breakthrough innovation.

JAMES COLLINS is chief financial officer at O Bee CU, Tumwater, Wash. Contact him at 360-943-0740.