Digital wallet apps unfold as phone users, businesses catch on

By By Mark Davis

The Kansas City Star (MCT)

Published: Wednesday, July 24 2013 12:00 p.m. MDT

This combination of Associated Press file photos shows the Google Wallet application on a mobile device in New York, left, and credit cards in a leather wallet, right, in Stockholm. Plastic has replaced cash for everyday shopping for many consumers, but if some technological wizards have their way, mobile phones will replace plastic one day. Several major retailers announced plans during the summer of 2012 to accept or expand such mobile payments, adding to services already available.

File, Associated Press

KANSAS CITY, Mo. — Mark Logan ordered lunch at Mildred’s Coffeehouse & Bistro in Kansas City’s Crossroads Arts District and stepped to the register to pay.

No cash. No check. No plastic.

Logan paid with his smartphone. He had previously loaded it with his debit card information, using a mobile application called Square Wallet, and snapped his own picture.

To make the payment, Square Wallet sent Logan’s picture to the iPad that Mildred’s uses for a register. The iPad tied his tab to his photo.

The barista, seeing Logan, tapped his photo from among several customers on the screen and told Logan the payment was going through. A second tap — technology took care of the rest.

“This is dead easy,” said Logan, whose receipt popped up on his phone.

So why don’t more of us pay with our phones?

Mostly, we don’t know we can. A recent survey of smartphone users found that half had never heard of the idea of a digital wallet, let alone downloaded and used one.

And few stores or restaurants take them.

All the same, you may be using one soon. Money is making a dash from pockets to smartphones thanks to digital wallets like Lemon, Isis, LevelUp and others.

The Carlisle & Gallagher Consulting Group forecasts that within five years, half of smartphone owners will prefer to pay for their gas, food, gadgets and other consumer goods with phones and mobile wallets.

That’s a big leap, and a lot needs to happen for that to prove true.

Several technologies are competing to migrate money to smartphones and they don’t mesh. By one count, perhaps 280 digital wallets or more have sprung up or are in development around those various technologies. Some retailers, notably Starbucks, have built their own apps for mobile payments.

It leaves consumers and retailers both guessing which digital wallet the other will be using. Unless they match, it will be back to cash, check or plastic.

Security concerns pose another hurdle: Shoppers instinctively don’t trust their money to what they don’t know.

We are comfortable with credit cards and debit cards. They’re reliable and accepted almost everywhere. Mobile payments have caught on faster in some countries with poor payment systems.

But consumers in Japan also pay with their cellphones more than Americans do, said Ray Ledford, who lives in Japan but spends half his time in the United States on work.

“Anytime you’re there you’ll see somebody using it during the day,” Ledford said during a recent visit to Kansas City. “I don’t see that here.”

If the digital wallet is really going to catch on here, it has to do more than pay the tab. Advocates say successful digital wallets will need to help consumers save money, become savvier managers of their payment choices, earn discounts and coupons and increase their value as customers.

Besides helping him buy coffee, Logan would like his phone to hold not only his money but also his driver’s license, proof of car insurance, and the other items normally stuffed inside billfolds.

“I’d love to stop carrying around a physical wallet,” he said.

Smartphones already have wormed their way into shopping.