Wednesday, November 2, 2011 at 10:49 am.

Who needs NFC? Square launches geofence payments

Tricia Duryee, reporting for All Things D:

A new version of its application, called Card Case, will leverage geo-fencing capabilities in Apple’s latest operating system update for the iPhone. The technology will identify when a person is within 100 meters of a favorite merchant.

Square’s director of products Megan Quinn explains that when a person is within range, a tab at that establishment will automatically open without a person ever touching the phone. Once the user places an order, and goes to pay, all they have to do is give their name.

So instead of waiting for everyone to have phones with NFC hardware built in, so you can tap your phone on an NFC reader, Square is solving the problem with software — the geofencing feature built into every iOS 5 device.

This takes some anonymity out of shopping. And I wonder how well it will work in areas where 3G data coverage is weak — especially indoors. But it’s a smart and interesting idea, and worth trying. (Important: You have to manually turn this feature on — so far, it’s not automatic. For something that many people may be uncomfortable with, that’s a good thing, even if it may limit adoption.)

One of the biggest problems with mobile payments is that they’re often more complicated and time-consuming than just taking out a credit card. This seems like it could be about as convenient as paying with a card, or maybe even a little more convenient, albeit with less anonymity.

As for Square specifically, it seems to have lost its monopoly as “company that lets me accept credit card payments on an iPhone or iPad” — the last several times I’ve paid a merchant using an iOS card scanner, they’ve all been using Square’s competition.

But if Square can reimagine the point-of-sale terminal with great software and smart features like this — and convince a bunch of merchants to switch from whatever they’re using today — it should be in good shape.

Related: Mobile payments are a mess