Imagine strolling into Starbucks for your regular morning coffee and seeing a message on your phone: “Would you like to buy a tall iced coffee with skim milk?” An app has detected your location and the time and noticed that you’ve bought the same drink five days in a row. You click yes, click to send payment, grab your coffee at the counter, and head out the door.
This is what Dwolla founder Ben Milne envisions for the future. “No one’s really won mobile yet,” he says. “I think there’s a ton of opportunity in that.”
Dwolla and its mobile payment iOS app Proxi are taking the first steps toward this future. Proxi uses GPS to locate people or merchants around you – like a taxi, gas station, or food truck – to pay with money pulled from your bank account. The fee is a flat 25 cents per transaction, compared to 2.75 percent for credit card acceptor Square.
Available in the United States, Proxi is integrated with Twitter, Facebook, Foursquare, and LinkedIn – and you control privacy settings for who can see you, for how long, and in what radius. Like PayPal, Proxi lets you send money to recipients without an account, by email or text message.
Proxi is taking a different approach than many mobile payment solutions, which use near-field communication (NFC). NFC chips transfer payment to a nearby reader with a swipe or tap, including the recently launched Google Wallet, which houses your credit cards. Paying with NFC is generally faster than Proxi but requires recipients to have the proper hardware, limiting transfers mostly to merchants.
But Milne admits that once more phones have NFC, they will likely add it to Proxi. “As devices that have NFC start representing a significant chunk of our user base, we’ll probably have to write something that allows it to leverage NFC,” he says.
This strategy of continual adaptation is consistent with Dwolla’s history. Once designed to send money to your Facebook and Twitter friends, Dwolla later enabled transfers to registered merchants and is releasing its API for developers to integrate Dwolla payments into their apps. And it’s clear by Milne’s coffee example that this version of Dwolla is just a starting point. In fact, Milne recently spoke about the mobile payment industry at the Future of Mobile conference in London.
As for who will “win” mobile, privacy and security may not be the biggest factors. Since the launch of Proxi in late August, Milne has been surprised by not being peppered with questions about privacy – users actually complained about having to confirm their privacy settings every time they fired up the app, suggesting that ease of use is more vital. Simplifying and speeding up payments will be crucial in signing up users and, in turn, convincing merchants to support a particular system. Dwolla is definitely a competitor to watch.