Pursuing Digital Payments for the Credit Card-less
By Rick Moss
Imagine you’re nineteen and off at college. (Pretty good so far,
right?) You’re standing in line at your student union’s c-store, neon-green
energy drinks and crunchy, pizza-flavored consumables corralled with one appendage.
With another, you’re texting Jordan, who just got Halo III and is anticipating
your arrival. You step up to the cashier and just that instant realize you’re
out of cash. (Did we mention that you’re nineteen?) Oh, misfortune!
… almost forgot. A few days ago, you went online and signed up for a FaceCash
account. Dad said, no credit cards — can’t go into more debt with all those
nasty loans. So here’s a way Dad can transfer money to your account in advance
for times when essential provisions are needed. And when you get a part-time
job, you can transfer funds in as well. (Yeah, right.) So cool … ‘Droid-in-hand,
you swipe up your FaceCash app, displaying your unique bar code and unique…
ur … face. The cashier scans it and debits your account. Sweet!
be so simple. At least, so believes Aaron Greenspan, president and CEO of Think
Computer Corporation, developer of the FaceCash platform. Aside from the attraction
of quick, secure, mobile digital payments for consumers who prefer not to involve
credit cards accounts, FaceCash is hoping to lure retailers with lower transaction
fees and simpler terms.
According to Mr. Greenspan, although quoted rates can
be much lower, once all the fees and incidentals are added up small and mid-sized
chains can easily pay over three percent to an interchange provider. “We’re
coming in at 1.5, which is a lot more attractive,” he told RetailWire.
since the retailer is just debiting an account, there is only one account number
involved. “So, it’s also a lot simpler,” said Mr. Greenspan. “You
know, the MasterCard fee agreement is, like, 126 pages long, and we’re
just one number.”
Because FaceCash is web-based, it’s designed to be a
quick start, especially for small merchants with limited tech resources. The
only hardware necessary is a barcode scanner.
FaceCash has been operational
for about a year. Looking at the “Merchant
Map” on the FaceCash site, however, some may come away thinking Mr. Greenspan’s
aspirations are somewhat quixotic. FaceCash is currently installed in only
10 locations: eight in Palo Alto, CA (near company HQ) and two in Cambridge,
MA (near Mr. Greenspan’s alma mater). Although the company is now doing a small,
localized test with Subway, Mr. Greenspan admits he is up against a grab bag
of state regulations, and lack thereof.
“We have to have money transmitter licenses in every state, usually. And
I say ‘usually’ because there are seven that are exempt, California being one
of them. And they’re not so much exempt even as they just don’t have
laws on the books about money transmission. But, 43 states do, plus D.C. …
Generally, if I want to expand nationally, I just can’t yet. So, we’re
waiting on this whole process to get done and it’s a long, painful process.”
Discussion Questions: Are non credit card-based digital payments an alternative
that retailers should be offering their customers? Do you see retailers jumping
on this bandwagon given the possibility to save on transaction fees?
[Author’s note] Granted, entrepreneurial ideas live or die on their own
merits, but FaceCash comes with a good pedigree. It happens that Aaron Greenspan
is the man who put The Facebook online at Harvard before Mark Zuckerberg decided
to follow his lead. He talks about it in this