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Jan

13


2011

Needed: A Payments Easy Button for Mobile

Patrick Ruffini

Patrick Ruffini

This Charlie Rose interview with Square’s Jack Dorsey, also chairman of Twitter, has the service much on my mind in the last day or so. As digital consultants in the advocacy realm, the potential for taking credit card donations live at events carries a huge “wow” factor. This is also tied up with the ability to take mobile donations via SMS, which the FEC has recently put the kibosh on owing to the failure to satisfy the commission’s typical disclosure requirements for political donations.

Watching the long-stalled development of mobile in the political arena, it can be pretty frustrating watching these solutions get tripped up in the bureaucratic thicket of the FEC, or the closed ecosystem of the wireless carriers — with all the architectural limits they carry that the free Internet does not.

But the elephant in the room is that none of the proposed solutions for donations-on-the-go are really that good. I imagine that every campaign worth their salt will get a Square card reader — and why not? they’re free! They’ll use these at events to let big donors fulfill their commitments right then and there, but I suspect they’ll remain a curiosity until the workflow for storing vital disclosure requirements for political donations is simplified within Square, or a Square API-enabled app configured to require these fields. Right now, taking a donation via a Square card reader isn’t easier than letting the donor write (yes — with a pen) their credit card number on a form.

The mobile “solution” is even worse. It’s not just that SMS as a donation medium is largely unproven — general Internet donations to the Red Cross in natural disasters far outweigh mobile, after all. It’s that there are basic architectural problems with the billing structure that make SMS donations far less desirable for campaigns and organizations. Topping the list is that you’re artificially limited to $10 (or similarly bastardized lowest-common-denominator amount) with a mobile donation. Probably 95% or more of online donations are greater than $10, with the average almost never dipping below $50 for any campaign. Even if you’re a believer in asking for low amounts to get them in the door, you’re leaving money on the table by a factor of 6 or 7 (even the cheapest of cheapskates will typically give at least $25). Moreover, the donations are billed through the wireless carriers and added to your cell phone bill, and the carriers won’t share this information with the campaign so they can report it to the government (hence the problem with the FEC). Without a massive distribution mechanism — think of the constant television promotion for the Red Cross during the Haiti earthquake a year ago — it’s unclear whether campaigns would see much uptake at all from a secondary medium like this.

Despite these discouraging signs, I’m not down on mobile donations at all. As it was pointed out in this study of online donations to the John Kasich for Governor campaign, donations that came in organically via mobile carried higher average amounts than those on PCs (making that artificial $10 limit on SMS even more frustrating!). To really take off, we need to think differently not just about donations on mobile — but payments in general.

To work, the mobile payments ecosystem needs to be dead simple, and scalable. That latter piece is why, though I love Square, I’m not sure it has long-term efficacy at mass scale. Though the service is vaguely online, it requires a person-to-person point-of-sale interaction. That runs counter to what’s really powered the boom in digital commerce and fundraising — the ability to conveniently transact from the comfort of one’s own home at 3 in the morning. Even Square’s biggest cheerleaders would admit that the service is all about empowering small merchants, not enabling large scale distributed commerce. Though Square is undoubtedly cool, as strategists, we need to look not just at whether a product is cool, but whether it’s the absolute best tool out there to get a specific job done.

It’s also clear that the current mobile donation infrastructure leaves a lot to be desired. It’s not that people don’t visit websites on mobile phones, it’s that they don’t donate using them. Even within the iOS ecosystem, the introduction of a computer-like display size with the iPad made a huge difference. Visitors on our sites were 3.4 times more likely to convert to becoming donors on an iPad than an iPhone, and iPad conversion rates were very close to those on desktop operating systems.

Beyond just mobile-optimized pages, we need something that will enable the kind of impulse buying we see in the App Store, without a person on the other end to receive the payment.

Which brings me to the Apple model, the Amazon model, and the emerging Facebook model for payments. With those services, you enter your credit card information once and you’re done. Purchasing apps, or books, or credits, is a one touch process. You don’t need to key in a sixteen digit credit card number each time you want to buy something.

There’s not really a great solution out there that duplicates this “easy button” effect for commerce’s long tail. PayPal, sure, but paying via PayPal on a regular checkout page leads you back to the PayPal website, and for heavily functional and repetitive tasks on a small screen, the app experience is really better.

What I’d like to see is the phone store my credit card information. And for checkout pages all over the Web to be able to read this information directly from my mobile device. Mobile versions of the checkout page would have “Pay with iPhone” and “Pay with Android” as options. You’d then be routed to the phone’s internal app to confirm your purchase, and your info would be sent along encrypted to the merchant.

I don’t envision Apple or Google being an escrow account for these payments, either. This is an integration that needs to happen directly with the credit card companies. Or, at a very basic level, it’s just glorified auto-fill using an app — giving the sense of one tap when the lone function being performed is auto-filling out the fields for you — perhaps after you enter your password like you do when buying something in the App Store. And it needs to be baked into the OS — consider this a feature request for iOS 5 and Honeycomb — to gain broad adoption and power impulse buying online.

Why might it happen? It’s not just a hobbyhorse of politicos. It has the potential to alter how tens of billions of dollars in the real economy are spent. I expect somebody — the manufacturers, the carriers, somebody — to get kickbacks from Visa, MasterCard and AMEX for baking this into their phones. And while talk of payments using near field communications would address the same problem Square is — updating the machinery for offline payments — what we need is something that can create a reality distortion field for online buying by making purchases dramatically easier than they are today.

  • Timothy Hathaway

    2011-01-15 20:06:00

    http://act.am/BDZ that is.

  • Timothy Hathaway

    2011-01-15 20:06:00

    http://act.am/BDZ that is.

  • Timothy Hathaway

    2011-01-15 20:04:00

    The problem with doing it as a donation app is the donor has to install the app to make the transaction. Even having a generic donation app that could service multiple causes would leave out the people using non-smart phones. They made up 83% of mobile sales in 2009 so they can't be ignored. SMS is the only univeral mobile app I know of and it's a non starter http://act/am/BDZ.

  • Timothy Hathaway

    2011-01-15 20:04:00

    The problem with doing it as a donation app is the donor has to install the app to make the transaction. Even having a generic donation app that could service multiple causes would leave out the people using non-smart phones. They made up 83% of mobile sales in 2009 so they can't be ignored. SMS is the only univeral mobile app I know of and it's a non starter http://act/am/BDZ.

  • Abbie

    2011-01-13 18:04:00

    You should check out Dwolla. It's a new system for paying from your mobile device. It just launched nationally.

  • Jeff Vreeland

    2011-01-13 15:42:00

    After reading what I just wrote and thinking about it - I am not sure there is anything preventing this being done right now. Anyone know if this is true or not?

  • Jeff Vreeland

    2011-01-13 15:36:00

    I think Google is in a unique position where they can allow this to happen via the app model. Integrating (via API) seamlessly Google Checkout into an in App donation would allow what is needed from the campaign/non-profit without losing a huge chunk of the donation. Google will make money from the Google Checkout process while providing a much needed service.