Blog: Mobile Payments Test Drive: Square Wallet, Starbucks App and Lemon (June 2013)

By Joe DeSetto, Emerging Payments Blogger

Mobile wallets get a considerable amount of media attention, but will any of them really drive users to leave the plastic card era behind? I recently did a comparison test of Square Wallet, Lemon and Starbucks’ own mobile app. While all the payment types I used worked surprisingly well, none of them was an experience that elevated shopping into the futuristic world these apps conjure up among payments enthusiasts.

Square, which recently launched its 3.0 version of its wallet, worked as expected the first time through as a simple QR code-based transaction, but it was actually at a second retailer that employed Square Register—the point-of-sale app for merchants—when the service showed its true colors. When you register with Square, your email account and stored credit card are all tied to your account. For my second attempt, I had a new phone. While I fumbled around installing Square Wallet on the phone, the retailer already had rung up the sale using my plastic card (complete with iPad signature, of course), and credited my first purchase toward the store’s loyalty program. Instead,Once the app was installed, I could see my previous card transaction and that in eight more visits I could earn a free item. The loyalty program tied to a transaction system is an attractive feature for retailers, and gives many independents the same ability to drive repeat customers as a custom app.

If Square and its merchants are trying to follow any one company in terms of tying loyalty to mobile transactions, it would be Square’s high-profile partner Starbucks. The long-established loyalty program is a major feature of the Starbucks app, and the animated stars earned for each purchase reinforce behavior and add a critical fun element. For transactions, the Starbucks reloadable cards can be added and funded easily in the app, including automatic funding. If the only store you shop in is Starbucks, mobile payments have arrived.

While Starbucks is a well-designed m-commerce experience for a specific retailer, and Square excels when a merchant uses the Square POS system, Lemon is taking a different approach. Lemon makes any standard credit card or other barcode card (loyalty programs, frequent flyer, gym membership, etc.) into a mobile payments-enabled QR code. I used Lemon to buy (another) coffee at a Dunkin’ Donuts location. The transaction was seamless, but apparently because the POS at the donut shop was already prepared for m-payments. Another retailer I tried loved the Lemon concept, but had no idea how to ring up a credit card by barcode scan. So while Lemon doesn’t require a special card reader (as long as retailers have up-to-date barcode scanners), there is still some retailer education, training and perhaps POS software tweaks involved. I also found Lemon to be fairly no frills. No coupons or loyalty programs, at least from the retailers I’ve found that accept it. Transactions via the Lemon wallet appear on the statement of my stored credit card exactly as if I’d used the plastic card.

I will likely continue to use Square and the Starbucks app. The Starbucks app features an integrated rewards program, a store locator and nutrition information, so any purchase at the coffee chain will probably be through its app. If I see the Square reader at a retailer, I’m likely to pay with it so I can accrue rewards. I also prefer Square’s paperless receipts over traditional payment methods.

Lemon is the enigma in this group. It works as designed, but I didn’t find any reason to go back to it often. In the relatively rare circumstance that I find a retailer that has a barcode scanner but doesn’t take Square, it might be a better option than taking out physical plastic. But in my experience, Lemon has the most work to do to capture attention. Lemon offers a wallet replacement service and card monitoring, but unless the experience at the register makes users reach for their app, that will be a difficult sell to the masses.

This test drive reinforced what others have said before—moving the plastic cards in your physical wallet to the phone isn’t the main event in this prize fight. All the apps I tried enabled my payment transactions via smartphone. However, only when the integrated experience between a customer’s phone and a retailer’s POS system enhances and rewards loyalty will any mobile wallet app ultimately become indispensable to consumers.

Joseph DeSetto is Paybefore’s emerging payments blogger and program manager of the Mobile Development Bachelor of Science degree at Full Sail University. He is the author of The Business of Design and previously served as chief technology officer for two mobile startups. If you’d like to comment on this blog post, please join the conversation on our Paybefore LinkedIn Group.

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