This week I had back to back experiences with iPhone payment systems. I figured I’d document it here and show the differences between the two. Also I’ll shed some light on which, in my opinion, will win.

First, above is the image I took after signing my iPhone based receipt generated by Square. I had a delicious coffee at Sightglass Coffee in SOMA, SF. Just like at Starbucks I order my over-priced (it is SF) Latte and she whipped it up. Then when asked cash or card, I obviously said card and she pulled out a wifi enable iPod touch. The iPod had a funny little ‘square’ plugged into the ‘jack’. The barista (if they’re called that outside of starbucks) sturdied the square and swiped my card. Then she handed me the iPod for me to sign with my finger. The next step was a prompt with the request, “how I would like my receipt, sms or email?”, so I requested email and entered my address. Very simple, I was done.

Below is the email that I received with a link back to my web based receipt.

This is an image of that receipt on Square’s web site. I was very intrigued by the inclusion of the “This is your first payment here.” This data got me thinking about the possible foursquare integrations, etc. It’s inherently social because Square begins to use payments as checkins (like Foursquare). They can tie in the location, with the transaction, with other peoples transactions around the same time. With a Blippy / Square combo you could have payment authorized checkins, with the social blast of the transaction.

My next experience was at the Apple store on Market St. in San Francisco. The experience was similar in that when I pulled out my credit card for payment I was greeted with an Apple device, this time an iPhone. This iPhone was sitting in a cradle of some sort that had a slot for the card on the right hand side. Much larger than the Square but still with one swipe I was charged, not interacting with the phone at all. The person manning this device asked for my email which he punched in and I was off. $30 bucks later for a Snow Leopard update, I got an email that was similar to Square’s except it had a PDF attachment with the receipt.

This is the Apple receipt. The gist here is that it just gets the job done. The payment process was simple but there isn’t really anything interesting about this, we’ve all seen a receipt.

So which system do I think will make the most impact? Well, if Apple lets Square into the app store which they must or it will be a PR nightmare, I really think that Square’s system has a significant upside. Here’s why:

1) The experience was a bit smoother

2) The trust is higher in that I was required to sign the receipt and if someone else were to use my CC I would immediately get an email about the transaction (once I associate my cc to my email, this should be automatic).

3) The distribution of the tiny Square device that plugs into any jack (not just iPhones) is small and cheap. They even plan to try and distribute these devices for free.

4) The potential integration with other social systems is huge. Although not everyone tweets, or blogs, 400 million people are on facebook and there are tons of interesting ways that venues could use this dynamic, recorded by actual transactions, to reach new customers.

Lastly, adoption is the only worry. We need to start to condition people to understand that a mobile device is no longer just a cell phone. With UberCab we’re training drivers that a mobile device can help then attract new business. With USAA’s new iPhone app you can actually deposit checks using images of those checks taken from an iPhone. This is not a phone anymore, it’s a computer, and with things like Square, UberCab, or new banking systems the world is changing literally in the palm of our hands.

I’ve been pondering, in great detail, the challenges of getting “old school” brick and mortar business to better understand, then implement the enormous value that certain web based tools could provide for them. My first observation is that it must happen in that order, understand, then implement. My second observation is that it must be in their terms and must align with their ‘current’ business goals (I’ll elaborate on that).

A friend who works at a major consulting firm asked me for tips on how to use Twitter for his firm. My advice was, “You’ve got to understand your business goals before you have a hope of using Twitter (all social media) correctly”, and the same goes for bars, restaurants, and retailers. Here is what I would be doing if I ran one of these types of businesses…

I’m going to play the role of bar owner for the example here, the same principles apply to all.

1. Identify the value for the “key players”

There are two key players in this game. First and foremost are my customers, without them I’m dead so there interests should come first. My goal is to drive them to my venue. Second, are the investors or owners of the establishment. If an action pleases one and pisses off the other it won’t fly. Mutual benefit is critical.

Customers

It turns out that my customers are becoming passionate about things I don’t even really understand. It’s not productive to bitch out it, it’s my job to learn and get on their level. People are playing web based games that can literally determine where they go next. Customers are following their friends, broadcasting their locations, following friends recommendations, tips, and reviews to make consumer decisions and I have to be paying attention.

Venues

Turns out this crazy new game allows me watch! I’m invited to this party…for once. And because it’s location based I can track their interaction with my bar. Details like who’s coming to me, how often, who they’re with, and what they’re saying about me are mine for the taking. Not only does it let me sit on the outside and observe, they let me engage and play the game, even better, they let me make up the rules! Parker Smith wrote on this blog, ‘r+d’:

Foursquare provides a dead simple and engaging platform through which any small businesses can establish a loyalty program.

Venues can offer specials and determine the incentive for game players (who by the way are our most passionate customers) to come back, and spread the word.

2. Measure the value

Now that my eyes have been opened to the world of technologies that can literally change the way I interact, monitor, and reward my awesome customers, why not make that physical interaction a bit easier? Introducing Square: Twitter inventor Jack Dorsey just launched a biz that is a new way of accepting payments that, oh by the way, allow you to track customer spending. Here’s how Foursquare and Square play well together… (diagram from Hutch Carpenter)

The social incentives remain on the Foursquare side, it’s fun, and people are rapidly spreading the word. Now, from a transactional standpoint, I want to see what kind of $cash$  this is bringing in and revolutionize my conversion and merchant process and significantly increase my visibility to all of it.

Now by using this tiny device that plugs into an iPhone (or another smart phone soon) and can accept credit card payments, I know who’s coming (from Foursquare & Square), I know who is with them (from Foursquare), and I know how much is being spent (from Square), and I know how often they come (from Foursquare & Square). The ultimate customer monitoring, visibility, and analysis has arrived. It’s just up to me to keep my eyes open, continue to learn and use the tools available to me.

Conclusion

I better understand my business goals of attracting and converting customers and I’m using the tool that they are having fun with to monitor and act on their behavior. That’s mutually beneficial. I’m not selling them anything they don’t want, I’m connecting on their level and learning more about them. I’ve taken the time first to understand why these tools will help my customer and me and I can easily implement it. Very simple, very engaging, very affective.

It’s almost as if Foursquare was meant “for Square”.

image via flickr