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!
But wait
... 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!
Life should 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.
Also, 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 blog post...]