really starting in the same place, with zero market share at retail shops. “No matter how big your company is, everyone has the same adoption problem, whether you’re Google or Apple or us,” he says.
So far he’s got about 20 vendors on board, including Ace Hardware and Subway, which are starting pilot programs in the Palo Alto area. He’s also targeting smaller businesses, particularly around Stanford University. “It’s a low number, but then again, a few months ago we were at six.”
To use FaceCash, merchants just have to have a CCD scanner—laser scanners don’t work with phone bar codes. FaceCash sells them for $30, and the low cost makes it possible for even really small businesses to accept their payments.
It hasn’t been out long, but FaceCash is already getting a lot of positive feedback, including requests to expand to overseas from people in places like Kuwait, South Africa, and most of the countries in Europe, Greenspan says. Unfortunately, Greenspan has enough problems expanding between states to think about crossing international borders. States can set up their own laws regarding cash transactions and business permits, which means the rules are completely different everywhere. So, while Greenspan can easily set up shop in California and New York, going into Pennsylvania would require a million dollars, while Hawaii would charge $1,000. So why the big discrepancy? “It’s not at all clear,” Greenspan says. “I think no one actually knows why these laws are still on the books.” Starting up in all 50 states plus the District of Columbia would cost about $7 million, a quagmire that effectively prevents small companies from getting into the mobile payments game across the country.
Greenspan is also keeping a close eye on the Durbin Amendment to the 2010 Dodd-Frank financial reform legislation. It does two main things: it directs the Fed to set standards for interchange fees that are proportional to the costs incurred by big companies (small banks and credit unions with assets under $10 billion are exempt), and prevents the big credit card companies from penalizing sellers who offer their consumers discounts for using other payment methods. Sounds good on paper, sure, but it’s a problem for small banks, credit unions and the up-and comers trying to launch mobile payment systems: now they have to compete with the lower rates mandated by the Fed, something many can’t afford. “There isn’t actually increased competition, because no one can enter the market,” Greenspan says.
But until Congress figures out a way to deal with the issue, Greenspan is continuing to focus on building his business, and on the successes of another big company that has started to use barcode scanning technology for payments: Starbucks. “It’s a huge deal,” he says. “They didn’t just pick any way to do it, they picked the exact same way.” He sees the similar service as a huge validation of his technology.
“I clearly believe in it,” he says. He even pays his rent with FaceCash–to a landlord who works at eBay, but won’t accept PayPal because of the fees.
