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Part of the power of social media and new mobile technologies is derived from the potential to disrupt activities and ideas that have not seen innovation in years. One of such disruptions coming to market nowadays is the use of mobile payment technologies. Companies like Square are taking advantage of the prominence of smartphones and internet connectivity to launch new payment processing methods that will put significant pressure on established companies.
Square: Disrupting Markets
Square is currently processing $6 billion in transactions annually and expects to double that amount soon. The company was founded by Jack Dorsey, who happens to be the Co-Founder of Twitter as well. Recognizing the value of such an innovative payment processing method, Starbucks CEO Howard Schultz formed a partnership with Square, where the former invested $25 million and the latter let Schultz join its Board of Directors.
For companies like Twitter of Facebook that consider personal information and preferences as key components of their business proposition, Square provides an amazing new source of information: the consumer’s actual spending habits. By tracking what customers are buying and where they are doing so, advertisers will be able to cater very personalized ads that will be directly connected to a person’s interests in a way that has not been possible in the past. While questions of privacy arise in this context, in a hypothetical world where privacy is not a concern people would be able to receive ads that are so well catered that they might improve their day-to-day lives with useful suggestions and a personalized advertising experience.
It is definitely important for companies to try to keep track of new innovations disrupting the typical ways of doing business. Taking the example of mobile payments, the benefits for businesses come from a variety of sources. Financially, if the company used regular credit card processing techniques it could potentially save a significant amount of money in fees and other charges by using new technologies like Square. In terms of image, a company using the latest technological innovations and adapting to be more consumer friendly will be seen in a positive light and will be able to strengthen its brand.
Sharing and Technology
It will be interesting to explore how the evolution of connectivity and mobile sharing will influence a person’s level of comfort with sharing information online. Using phones as payment mechanisms, such as through Google’s efforts with Google Wallet which uses near field communications (NFC) technology to allow Android devices to act as credit cards when placed in payment pads, will definitely gain prominence in the coming years. It is not hard to imagine a future scenario where a person’s purchases are immediately shared to Facebook, maybe with an Instagram photo attached to the post.
As with many other disruptive technologies, mobile payments have the potential to bring the online and offline worlds a step closer. While the industry is rapidly changing and the future is uncertain, it will definitely be a topic to track in the coming years. Companies need to recognize that technological innovation will determine their future operations, and the early they make this realization the better. It is definitely not by chance that a leading company like Visa currently holds an undisclosed stake in Square…