New Square App Feature Makes Mobile Payments Even Faster

Imagine purchasing goods without needing to fish in your pocket for a credit card, or even handle your mobile phone. If buying was this easy for your customers, what could it do for your business?

San Francisco-based mobile transactional startup Square has unveiled an update to mobile payment app Card Case that could point to an interesting, and even more expeditious future for the world of mobile payments. The iPhone- or Android-ready app allows users to automatically "open a tab" -- that is, a virtual transactional account -- at any business currently supporting Square's credit card reader and point-of-sale software. The app uses the positional information already in a user's mobile phone to define a virtual boundary, called a geofence.

When a customer has opened the "tab" on their mobile phone and enters a geofenced area that's defined by the retailer, the customer's name and photo pop up on the checkout kiosk. The retailer then adds the item the customer wants to purchase to his or her tab, and that's it. The customer closes the tab on his or her mobile phone and is charged for the sale.

A new "automatic tabs" update aims to eliminate the transaction experience even further. Now all a mobile phone-carrying customer needs to do is cross a retailer's geofence and his or her tab opens automatically. When the customer leaves the defined area, the tab automatically closes and he or she gets an email notification of the transaction.

We went to a Card Case-using business -- a local coffee shop -- to find out if paying for a latte really was just a matter of telling the barista to put the bill on our tab. 

What pays: The basic Card Case service is an easy download from the App Store or Android Market. We found a surprisingly rich listing of Card Case-ready businesses in our area, including directions, phone numbers, menus and links to social media. Entering our credit card information and enabling the system was simple. At the local coffee shop, paying for a latte really was just a matter of telling the barista to put the bill on our tab.

Card Case differs from other "contactless" payment options like Google Wallet or Exxon Mobile Speedpass, which transfer funds when a mobile phone with a wireless transmitter comes near a point-of-sale terminal.

For businesses, Card Case can also be attractive. The required card reader is free. And the 2.75 percent flat swipe fee Square charges for transactions can be desirable compared to other point-of-sale solutions that charge steep equipment charges and in some cases higher a cost per transaction.

What doesn't: First, the upgraded automatic tab technology so far only works on the latest Apple mobile iOS and not for Android devices.

Secondly, Card Case is a proprietary system, which means you need to be using the Square app and card reader as your point-of-sale solution. You may have to use separate terminals for some transactions and integrate those sales into your larger accounting package which, depending on your sales volume, may not be worth the hassle.

Bottom line: For firms that cater to smartphone-carrying customers, Card Case and its automatic tabs functionality offer a refreshingly new way to collect mobile payments. But until mobile payments replace the wallet, your customers are likely carrying billfolds and credit cards anyway.

So, for now, your traditional point-of-sale will be how you do most of your sales.