FaceCash

» see facecash.com as it lived, on the wayback machine

~ the eulogy ~

FaceCash was California-only at the licensing layer, and the licensing layer is where it died. Think Computer Corporation, a small Palo Alto company run by Aaron Greenspan, began building a mobile payment system in 2008 and launched it in April 2010. By the following year it had signed up 25 merchants around the Bay Area and roughly 500 people to pay with it. Those numbers are small, and Greenspan's own account is that the thing was working and making money without any venture capital behind it, which in 2010 payments was rarer than scale.

Greenspan was already a known quantity for other reasons. He had built an earlier campus system at Harvard before Facebook existed and spent years in a documented dispute with the company over it, and he has since run a public legal records project. None of that had anything to do with why FaceCash closed, but it explains why a payments startup with 25 merchants got written about at all.

~ the dossier ~

~ how it worked ~

You opened the app and it showed a barcode on your phone's screen. The merchant scanned the screen, and their terminal pulled up your photograph alongside the charge, so the person taking the money could look at the picture and then look at you. Hence the name. It meant the identity check was done by a human eye rather than by a PIN, and it meant the whole thing ran on hardware that every shop already owned, because a barcode scanner reads a screen just as happily as it reads a label.

The timing is almost funny in hindsight. On 8 June 2011 the trade press covered FaceCash adding NFC support, the technology the entire industry spent that decade insisting was the future of in-store payments. Three weeks later the service was switched off for good.

~ the letter from the department ~

California passed the Money Transmission Act in 2010, folding a new category of payments businesses into a licensing framework built for companies that wire money internationally. In April 2011 the state's Department of Financial Institutions notified Greenspan that FaceCash required a domestic money transmitter license. The statute set a minimum net worth of $500,000 for licensees, with the actual figure left to the commissioner's discretion, plus bonding on top. Think Computer could not show it.

What Greenspan has described since is less a regulatory process than a wall. He appealed to the department's parent agency, to the governor, to both houses of the state legislature and to Congress, trying to establish what he actually needed to provide, and says he was never able to get a usable answer. The part that got quoted was blunter. "I was literally told, 'You will go to federal prison if you don't shut down.'"

FaceCash operated until 1 July 2011 and then stopped. The employees were laid off and the office was closed, with the remaining assets sold off behind them. In November 2011 Think Computer filed a federal lawsuit against the governor of California and the department.

~ what this one is actually about ~

Most deaths in this archive came from a competitor or from running out of other people's money. This one came from a filing cabinet. Square and Google were building the same category in the same state in the same months with hundreds of millions behind them, and the floor the statute set was trivial for them and fatal for a company with 25 merchants. A net worth requirement is not an opinion about whether your product works. It is a question about your balance sheet, and it only ever has one answer.

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