Smartphone Contactless Payments – The Next Big Thing?
|Smartphone Contactless Payments – The Next Big Thing?|
Will mobile phone payments become the next big “thing?” So far, the roll out and acceptance of this technology has been slow. But that may have changed big time as of November 14th.
Before then, the only nationally accepted form of “contactless purchasing” had been Google Wallet. However, the playing field was anything but level. Sprint was the only carrier that did not block Google Wallet from working on Android phones until October when AT&T had a late change of heart. For the past year plus, AT&T, T-Mobile and Verizon had been blocking Google Wallet while they worked on their own mobile phone payment solution, Isis.
Released nationwide on November 14th, Isis requires an approved NFC (Near Field Communication) smartphone and a special SIM card (ostensibly for added encryption security) to be in the phone. The SIM card is available for free from your local phone service provider. Isis has pre-negotiated deals with several retailers with more promised to be in the works. Broader usage of contactless payment terminals by retailers will be critical to accelerating the adoption of phones being used as payment devices.
The most confusing aspect to the successful acceptance by the masses appears to be confusion surrounding the setup of the smartphone programs and what, if any, recurring fees are involved to the end user. Reduced to its simplest form, both Isis and Google require you to use an entity that they approve that does the actual transaction processing behind the scenes.
Isis so far has approved certain types of Chase cards or the AMEX entity called Serve. The Chase cards draw against your line of credit with them and may or may not have fees associated with them. Check with Chase if you’re considering this option. With Serve, if you establish your account using the Isis app, then you will not incur any recurring charges. You can setup either a debit card or most any credit card to “load” your Serve account with funds. They even let you set limits on how much you will approve ahead of time. As an added incentive, through January 31,2014, Serve will refund 20% of your purchases using Isis up to a maximum of $200 ($1,000 of purchases). The refund will show up as additional credit in your Serve account.
Google Wallet is a bit more straight forward. You can setup your credit car or debit card to fund your Google Wallet without the need of a third party like Isis does. In fact, Google has begun actually issuing Google Wallet plastic debit cards that can be used in stores that don’t yet have the contactless payment terminals. Again, check with your bank or credit card company to see if any fees are involved, but in most cases, funding your Google Wallet should not incur any charges.
Google‘s latest version of Android (KitKat v4.4) has modified its mobile payment software to be included in the operating system. This way, carriers will no longer be able to block it from working (without violating their own agreements with Google). With the carriers backing of Isis and the broader availability of Google Wallet, it is possible this “thing” may catch on. One thing is certain though; its potential. Purchases made using smartphones has the potential to change the way Americans shop more than anything since credit cards first started replacing cash purchases 50 some years ago.
And as always, caveat emptor (buyer beware). Do you own research to see if either (or both) of these solutions may be right for you. Being on the leading edge of technology is often times referred to as being on the “bleeding edge” for a reason.