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Should Sending Cash Be As Easy As Sending E-mail?
IRA FLATOW, HOST:
Now up, it's time for another episode of our App Chat series, where we review the latest apps and talk about new ways to use your smartphone. And today, we're going to talk about mobile payments. Ever gone out to eat with your friends and when the bill arrives, you realize it's cash only and, oh, you have no cash. What are you going to do?
Somebody picks up the check, right? Your friends pick up the tab and, of course, you want to pay them back. You don't want to stiff them for the check, and you want to pay them right now. Well, guess what, you can do that. There's an app for that, and a lot of apps, actually. And here with us to talk about it is Ellis Hamburger. He's a reporter at The Verge here in New York. And he joins us on our New York studios. Welcome.
ELLIS HAMBURGER: Thanks for having me.
FLATOW: Well, I mentioned that app, but there's also something called Square Cash, too, right?
HAMBURGER: That's the hottest new thing. And the funny thing is that it's not even an app. That's the barrier to entry for a lot of people. You talk to your buddy, you say, hey, we just split dinner...
HAMBURGER: ...but you got to download this app, so we can pay each other. And you say, oh, I just downloaded another app last week when I had dinner with another friend.
HAMBURGER: But the idea behind Square Cash is that everyone knows how to use email. Everybody already has the email app on their phone, everybody's got their friends' email addresses already stored in their phone. So the virtue of Square Cash is that in order to use it, I would send an email to you...
HAMBURGER: ...and I would cc firstname.lastname@example.org, and type a number in the subject line, let's say, $20. And that's it.
FLATOW: That's it.
HAMBURGER: If it's the first time you're using it or the first time you're receiving it, you get a page in your email to type in your debit card, and you're done. There's no creating an account. There's no login with Facebook. There's no add all your friends and follow all your friends so you can do it. It's the most seamless experience I've used for sending money to a friend.
FLATOW: But I know I would be afraid of giving out my bank account number on an email. Should I?
HAMBURGER: That's the thing, is that you're not giving out anything in an email. All you're doing is stating your intent. So they send you to their secure Square homepage where you enter in your debit card and from that point, they associate it with your email. So there's not actually anything taking place in email, even if that's the clever illusion that, I think, is alluring for a lot of people.
FLATOW: Mm-hmm. Quite interesting. Talking with Ellis Hamburger on SCIENCE FRIDAY from NPR. Is that the only with non-app way to send cash to each other?
HAMBURGER: Just about.
HAMBURGER: They're all apps. There's Google Wallet. There's Venmo. There's PayPal, which has been around for a long, long time. They're great variety of ways to do it, but they all ask you to set up your bank account, look for your routing number, look for your bank account number, wait for the deposits to come in so they can verify that it's actually your bank account. And Square has done a lot of clever work with banks to make it pretty seamless. You enter in your debit card, and they do a lot of background checks in the background to see if they can figure out who you are. And that's how they go about that process.
FLATOW: Mm-hmm. What about - I have seen ads from banks themselves now saying, you know, paying the babysitter right there, and you can just send a little bit of cash.
FLATOW: Is that a viable alternative to these things, or is it as good or better or - where would you rank that?
HAMBURGER: I think the experience in some ways is faster, but it's only for people who are members at the same bank. So if I'm trying - if I bank at Chase and you bank at Citi, I can't Chase QuickPay you.
HAMBURGER: So the idea - the holy grail, in a way, is to have one app, one service so you can send somebody money with as little barrier to entry as possible.
FLATOW: Mm-hmm. With Square Cash though, what happens if somebody writes themselves an email from my account...
HAMBURGER: That's a great question.
FLATOW: ...send some money.
HAMBURGER: So the premise that they're operating on is that your email is already a very secure place. For a lot of people, your emails are some of your most personal documents in your life. And there are various ways to protect your email, which I would suggest anybody does, everybody does, namely two-factor verification. And that sounds complicated, but really all it is, is you go into your Google settings, and you say anytime anyone tries to log in to my Gmail, not only do they need the right password but will text your phone with a little code - maybe four, five digits - and you also have to enter that. So really it's another 30 seconds, but it offers an immeasurably secure experience.
FLATOW: What about, you know, there are some gas stations now. You just swipe a card right by the - paying for the gas - what about doing that in other venues?
HAMBURGER: That's the idea behind this standard called NFC. So instead of going through the Internet, going through email, NFC is saying, well, I'm right next to you. Why can't we just bounce our phones together and pay? But it ends up that there's a lot of regulatory measures that make that a lot harder to implement than it sounds, namely the fact that Google was trying with Google Wallet to create one platform so you can pay your friends, you can pay McDonald's, you can pay Starbucks. But the carriers were not down with that idea.
They wanted to come up with their own payment scheme that they could get all their customers rolled up in. And that actually just launched last week. It's called Isis. But no doubt, Verizon and AT&T aren't going to be able to come up with as nice of a user experience as San Francisco startups.
FLATOW: Well, you think that the credit card companies would say, hey, this is a great idea for us. Why aren't they doing that then?
HAMBURGER: You would think. And I think they are probably realizing that right about the time when Square debuted their little white reader.
HAMBURGER: That's $10.
HAMBURGER: And guess what most restaurants are using? They're using that big, bulky brick of a piece of plastic and it makes the credit card companies look like idiots. But they're not only, in a lot of cases, renting those out to people, but if you look at the technology that's still running over the phone line, it really makes the consumers realize how far behind they are and how the credit card technology, in a way, is very static and hasn't changed. And there are new security measures but not new ways to pay people. And that's one of the things that Square, with their original reader, let alone Cash, I think, really illuminated.
FLATOW: And to what advantage also over PayPal? PayPal has been around a lot.
HAMBURGER: PayPal is a great one. And a lot of people already have a PayPal account to send money to your friends. One of the things about PayPal is that not only do you need to hook up your bank account with your routing number and all that stuff. So, it's harder to convince your new friend, hey, let's just set you up with a PayPal. You got 20 minutes.
HAMBURGER: Or three days. But the other thing about Square Cash is that it aims to get your money to you within one, two days with no holding account in the middle. Whereas PayPal not only holds on to your money for, let's say, five to seven days, but you also have to actively withdraw it. You have to go into the app and say, I want my money out. Whereas the Square Cash, if we're both set up, I send you the email, cc email@example.com, and you get it within two days.
FLATOW: Right. When they hold your cash, they're making money in your cash holding it. All right. Thank you, Ellis, very much.
HAMBURGER: Oh, my pleasure. Thanks for having me.
FLATOW: Thank you. Ellis Hamburger is a reporter at The Verge here in New York. And that's all the time we have for today. Transcript provided by NPR, Copyright NPR.