ePayments Week: Google debuts coupon service

Google Offers is in beta, Virtual Piggy limits kids' spending, Android user builds his own Starbucks app

Here’s what caught my attention in the payments space this week.

Google is back in Portland with Offers beta

Google OffersGoogle followed up last week’s Google Wallet announcement with the launch of its Groupon competitor, Google Offers. Eric Schmidt announced the rollout on Tuesday at the D9 conference. As with Google’s Hotpot trial last winter, the beta rolls out in Portland, Ore., with plans to expand to San Francisco and New York later this summer.

This is Google’s Plan B on coupons after being rebuffed in its $6 billion bid to acquire Groupon, which has a decent head start with daily offers in 500 markets in 44 countries. Google is counting on what used to be called “vertical integration” to propel its service to the front of the line. There’s obviously the tight integration with Google Maps and its check-in and review service, Places. Also, Offers will integrate with Wallet so that as NFC wireless payment technology becomes more common in phones (it’s only in the Nexus S today) the Offer you buy will be automatically noted in a tap-and-pay purchase at the merchant. And perhaps most significantly, Google will integrate the Offers and geolocation data of users with its mobile ad delivery network, creating a wraparound package that includes knowing where you are, what you’re doing, and then offering an incentive to buy something new nearby.

Floyd's Coffee ShopSchmidt’s on-stage announcement at D9 came before a large screenshot of an offer for $10 worth of coffee for only $3 at Floyd’s Coffee, which has two Portland locations. Floyd’s co-owner Jack Inglis told me they were on track to sell out their 2,000 Offers on Wednesday and were bracing for the first wave of redemptions on Thursday. “It feels like amazing luck to be chosen,” Inglis wrote in an email. “Our neighborhood is filled with IT and design firms, so they were all over it from the word ‘go’.” Inglis said Google offered to pay out promptly “unlike other coupon co’s” and that he immediately saw the potential to reach a lot more people than through his current coupon campaign. “Being chosen as THE business for their roll-out was the icing,” he wrote. 

Virtual Piggy caps kids’ spending

Remember last winter’s Smurfberries drama, where parents were outraged to find that their kids had purchased bushels and barrels of Smurfberries through in-app purchases on the iOS game Smurf Village? Apple responded quickly, changing the password rules for in-app purchases — no doubt encouraged to do so by the Federal Trade Commission’s public promise to look closely at the matter. Previously, after entering an iTunes password, you could make purchases for 15 minutes before iTunes again asked for your password. As was widely reported in March, with the iOS 4.3 update, Apple changed the rules so that every in-app purchase required a re-entry of the password no matter how little time had passed.

Virtual PiggyThis may have slowed down kids’ use of in-app purchase, partly because some kids don’t know their parents’ iTunes passwords and partly because it’s a hassle to keep entering it. Other solutions are beginning to appear as well. Nvinium Games, which makes a slew of social games like Unforgivenwar.com and StumpyGames.com, says it will implement Moggle Inc.’s Virtual Piggy technology, which lets parents set limits on how much kids can spend online per week or per month. Jo Webber, Moggle’s founder and chairman, said that that in addition to gaming partners, the company is working with sports event companies, toy companies, teen clothing companies and others targeting the under-18 market to implement Virtual Piggy as a broad online spending account. Parents could load it with a monthly limit and kids could spend at any merchant that accepts it. For now it works on the parent’s credit card, but they’re talking with banks and PayPal about extending it with other payment options.

Android developers not waiting for Starbucks

Starbucks’ mobile payment app, which taps available credit on a Starbucks card and generates a bar code for scanning to pay for coffee and scones, is officially available only on the iOS and RIM platforms. But Andrew Johnson at American Banker’s MobileBanker site has a great story about an Android developer (and former Starbucks shift supervisor) who couldn’t wait for an Android app.

Stewart Gately crafted an app that acts as a front-end to Starbucks’ website, thus allowing users to access the credit on their Starbucks cards to pay for coffee via a bar code generated and displayed on the screens of their Android phones. As Johnson notes, Starbucks isn’t thrilled since it has little control over the security of Gately’s app, and its lawyers have already sent him one letter asking him to knock it off. Gately made some changes that distanced his app from the corporation, but it appears the app is still functioning — and popular, having been downloaded more than 160,000 times, according to Johnson. That should be enough to signal to Starbucks that the love of caffeine crosses all platform boundaries, and encourage them to get moving on their own Android app.

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