With new mobile payment app, Cumberland Farms allows customers to buy gas with their phones

I pulled up to Pump #10 and opened the SmartPay app on my iPhone. I'd already downloaded the app, and it asked me to log in to my PayPal account. It then used the phone's GPS to determine which Cumberland Farms location I was at and asked me to enter the pump number. Though it was a nice morning and I was standing outside my car when I did this, one benefit of SmartPay is that on a freezing day you could do it while sitting in your car, rather than swiping your credit card at the pump, punching in your ZIP code, and waiting for the transaction to be authorized. The SmartPay process was speedy, and in a few seconds the pump lit up and asked me to select a grade of gas. When I was done filling up, my phone showed the total I'd spent, along with the amount I'd saved. (PayPal is funding the five cent per gallon discount as a way to encourage consumers to use the app.)

After the transaction, I was sent a receipt by e-mail. The only confusing thing was that I also received an e-mail that said I had authorized a payment of $100 to Cumberland Farms. But when I read the smaller print in that message, it noted that it was for "up to $100 in fuel" and said the "final payment will only be the amount dispensed."

Banks (pictured at left) told me that Cumberland Farms hopes to roll out the app to all 600 locations, and would like to continue the five cents per gallon discount — or perhaps increase it to 10 cents. "For us, this is a way to attract new customers who are mobile-savvy," he said, adding that he believes the app can help increase customer loyalty. It's also a way for Framingham-based Cumberland to save on credit card transaction fees, since the PayPal network is less expensive to use.

Banks also mentioned the possibility of consumers using the app to buy a quantity of gas at a fixed price, and then "draw down gallons as they need it." That could be an interesting way to protect against future price increases.

I'm not someone who has been a regular purchaser of Cumberland Farms gas in the past, but the simplicity of using the new app — combined with that five cents per gallon savings — has created a new incentive for me to pull over when I see a blue-and-green Cumby's sign.

Mobile payment is an arena that is developing quickly, and even well-crafted apps like SmartPay feel to me like interim solutions: will you really want to download a separate app for every merchant with whom you do business? I think most of us will wind up with an app or two (from PayPal or SCVNGR or a credit card company) that will handle payments at lots of different businesses.

(I wrote about the Fig Card mobile payment technology being tested in a South End café back in November 2010. Apparently, that story led Cumberland Farms to get in touch with Fig about using the technology at their gas stations.)