Flint Mobile and The Second Generation Mobile Payments Startup

So far, mobile payments have involved layering new technologies onto a smartphone or existing device.

Now a new generation of mobile payments firms are offering mobile payments solutions that require no new hardware at all.

The approach comes from a startup called Flint Mobile, which is targeting small businesses with an app that will scan credit cards using the camera’s phone to scan card info.

The company promises complete security and will not allow merchants to store card data on their phones. Flint is also offering lower fees than more established mobile payments providers, with rates starting at 1.95% of the transaction.

The innovation may be welcomed by many small business owners who have had problems with the accessories other mobile payment providers offer, which are often flimsy and unreliable. But will customers feel comfortable giving their credit card over to someone snapping pictures?

If you took a health check on the mobile payments world right now, you’d identify three out-performers. The first would obviously be Square, who grew from nothing in 2009 to a value of $5 billion within five years. Secondly, Paypal quickly followed in Square’s footsteps by offering a near-identical dongle for free to existing PayPal customers, and its established brand helped the company catch up faster than most in the industry expected.

A third monster in the mobile payments world is a lesser-known and surprising company: Starbucks. A total of 11% of Starbucks sales are routed through the Starbucks app, meaning the company sees four million mobile payments per week with about eight million consumers using the mobile app.

The success of the mobile Starbucks app is easy to explain: customers wave their phone in front of a scanner, which immediately recognizes the bar code and deducts the transaction from the customer’s account. No flimsy dongles, no awkward explanations to technophobic consumers.

Flint Mobile is looking to recreate that simplicity, and it just might work. But small business owners may have trouble explaining to their customers why they’re taking a picture of their customer’s credit cards, and it may take a long time for this behavior to become more acceptable.

Until then, we may see even more startups take inspiration from Flint, and provide an even better, frictionless solution.