Blog: Tipping Point for M-Payments Hidden in SMS App and Obscure Pizza Promo (April 2013)

By Joseph DeSetto, Emerging Payments Blogger

It wasn’t long ago that mobile payments apps for the current generation of smartphones were difficult and time consuming for even experienced programmers to create. Much like the early days of e-commerce, standard ways of protecting user data, providing a consistent interface and user experience that would be trusted, and navigating a maze of costs associated with m-commerce made apps that included transactions for physical goods or services a relatively rare breed.

But while much has been made about Square’s inspiring user interfaces or the headphone jack-based card reader frenzy it created, a more important trend started behind the scenes by startups and established firms far from the spotlight of the darlings of mobile commerce. Standard payment APIs, or Application Programming Interfaces, were making commerce as easy to add as any other technology on a modern smartphone, such as location-based services, posting photos to Facebook or adding retro filters to a photo. These APIs for mobile platforms, from companies like Dwolla, Stripe and Balanced, as well as old stalwarts like PayPal, took the PCI compliance worries and much of the complexity away and made payments a feature developers could seriously consider.

Two projects released this month show how these standard APIs soon will enable many apps that once had no payment features (outside of the closed digital goods systems of Apple and Google) to add payments in new and interesting ways.

GroupMe is a text messaging app that was acquired by Skype, which was in turn acquired by Microsoft. As of last June, the app had more than 4 million users who send an average of 550 million text messages per month. But for a new twist and new revenue opportunity, GroupMe’s latest update added a niche payments feature. GroupMe Split is a feature that enables co-workers and friends to, as the name implies, split checks at a restaurant or bar. The payment is initiated by one person in the group, and others in the group receive a payment button to contribute their portion of the bill. While it may seem like a small feature, the 99-cent charge for using it will surely add up with millions of potential users.

More remarkable than the Split feature is the GroupMe blog post explaining that, thanks to the Balanced API, this integration work was completed in a weekend. Work started on Friday afternoon, and by Sunday the small group of developers had split its first check—presumably for a case of Red Bull.

A more whimsical example of the same phenomenon was the SXSW Interactive Award winner in the Business category—the Red Tomato Pizza button. This brilliant promotion landed worldwide attention for the Dubai pizza shop. The button is a refrigerator magnet that, when pressed, wirelessly triggers the preconfigured app on your phone to send a delivery order to the pizza shop. The idea of pressing a single button for ordering, payment and fulfillment was so compelling that Red Tomato has a waiting list for its magnets. This sort of integrated ordering from devices is now possible because developers have payments as a tool at their disposal.

Much like PayPal enabled every Website to securely accept credit cards years ago, the new mobile payments APIs will enable any app with users to consider taking payments. From promotional magnets that make a pizza appear at your door to text messages that settle a lunch bill, payments are about to leave dedicated apps and become a standard way mobile developers make their apps stand out, earn revenue, and offer new and interesting features.

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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