Digital wallet apps unfold as phone users, businesses catch on
We use them in store aisles to check prices elsewhere. They allow us to read online product reviews while looking at the product. And who hasn’t snapped a photo and texted it to a spouse or partner for some quick feedback?
Now phones can pay, too, using one of several competing technologies. If that’s news to you, don’t feel bad. It even catches some store clerks off guard.
When and where he can, Jared Jennings shops with the Google Wallet on his cellphone. As the clerk rings up the total, Jennings waves his phone near the machine where others would swipe their credit cards. Instantly, the payment is made.
“How’d you do that?” is what Jennings said he hears often enough. “Usually, it’s a great point of conversation.”
Other digital wallet users recount similar stories because the technology is rarely used even when available.
Google Wallet relies on something called near field communication technology, or NFC. It’s embedded on a computer chip in some smartphones.
As the name suggests, near field communication sends the payment information only a short distance to the register’s reader. The customer then gets a receipt, through email if he chooses.
Microchip payments are routine in Europe, where credit cards rely on embedded chips instead of the magnetic strips found on American credit cards.
Chips are coming here. They’re more secure, said Carl Bradbury, Commerce Bank’s director of consumer card products. He said Commerce is moving to them.
“They can’t be counterfeited.”
The added security means companies that sell register equipment to stores are including NFC technology, anticipating widespread use of those chips.
NFC technology does face one big roadblock: Smartphones are everywhere, but few come with NFC chips. No iPhone does; Apple Inc. hasn’t put an NFC chip into any of its phones so far.
But Apple’s not a problem for the Square Wallet, because it uses a different technology.
It relies on GPS positioning and “geofencing” technology to find the Square Wallets of customers who come in, or happen to be nearby the store’s Square-powered register. The payment changes hands through the Internet — on the cloud, as they say — rather than through direct communication between the register and phone.
The geofence around the store’s register, however, can be bigger than the store. Bryan Merker learned this a few weeks ago when he fired up Square at Beignet in Kansas City’s City Market where he is the chef and owner.
“Someone’s sitting in the coffeehouse next to us or they’re wandering around. I know they’re in the market,” he said.
He knows because their photos pop up on his iPad register but they aren’t in his shop.
There are yet more mobile payment technologies. One called radio frequency identification, or RFID, works somewhat like NFC but has a longer range.
Another technology compacts the customer’s credit or debit card payment information into a bar code specific to that transaction. The code pops up on the customer’s phone and the clerk scans it to complete the payment.
The craziness right now comes from all the different ways mobile payment technologies are being pitched to consumers.
Be prepared for an onslaught of offers.
During a six-month stretch last year, a team of mobile strategy analysts at Citigroup counted 16 mobile payment announcements a day. Not all were new wallets, but it impressed upon the analysts how fast the field was moving.
“You can’t do this 200 different ways,” said Dom Morea, senior vice president of advanced solutions and innovation at First Data. The company provides retailers with the technology to accept various kinds of payments.
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