A glimpse of what may represent the future of payments has arrived, but thus far only in certain geographic areas. With the Card Case smartphone application from Square Inc., consumers pay simply by stating their names at the point of sale.
The smartphone signals its presence to POS systems in participating stores so the sales associate sees the customer's name and photo on a screen.
The system also automatically charges the purchase to a credit card linked to the customer's smartphone, with the device itself never leaving the consumer's pocket, according to Square.
Descriptions of Card Case began appearing in print and on websites this week.
The product provides a glimpse of the future, according to Gil B. Luria, senior vice president at Los Angeles-based Wedbush Securities LLC. "I already have it in my pocket," Luria says.
The pleasing experience of making a hands-free purchases illustrates why consumers will abandon plastic cards within five years, he says.
"Feel like a regular when you pay with Card Case," the Square website says, referring to the fact that cashiers "recognize" customers they have never seen before because of the shoppers' images displayed on the screen at the POS.
"Pay without paying," the site says of the experience. "It's fun and easy."
That exuberance might seem justified. Square, co-founded by Twitter executive and celebrity entrepreneur Jack Dorsey and a childhood friend, has garnered plenty of coverage for attracting more than $1 million in capitalization, earning a $1 billion valuation and securing backing from Visa Inc.
In a recent development, Wal-Mart Stores Inc. is bringing the Square card reader for smartphones and tablets to the masses.
But it remains to be seen whether Square can shepherd Card Case to success, Luria contends.
"To drive popularity, they need two sides of the equation-a lot of merchants and a lot of users," he says, noting the difficulty of attracting either category without the other one already onboard.
Card Case has signed up some merchants in San Francisco, where Square is located, and has just a smattering of participating stores or restaurants in a few other major population centers, according to published reports.
The product's progress may come under close scrutiny by the merchant-acquiring industry. Square has ignored independent sales organizations in its plans for distributing the Square card reader.
The Card Case may pose less of a threat to ISO and agent card residuals because merchants could accept the app without changing card processors, observers say.
Besides, Square has not announced any loyalty rewards schemes to accompany Card Case.
Meanwhile, Apriva LLC is attempting to provide ISOs a mobile-wallet niche by providing such loyalty.
Concerns about the Square card reader's security also may transfer to the Card Case, observers contend.
The company has discussed the possibility of adding encryption to the reader.
