Mobile wallets or payment applications that store credit or bank card information for point-of-service payment processing speed, ease and convenience are quite popular among mobile handset users. With one tap of the smartphone or tablet, consumers avoid losing credit cards, exposing the cards to credit theft and having to carry cash. How prevalent is this technology, where might it be headed, and is it as safe as it’s purported to be?
Near Field Communications or NFC technology was developed only a few years ago, and mobile phone users embraced it with just as much enthusiasm as ice cream on a hot summer day. NFC technology is based on Bluetooth proximity and stores credit card information, just as a wallet does the actual credit card.
When the mobile user downloads or activates the app, he programs his credit card or cards, annotates which is primary and uses the app to purchase merchandise from participating retailers. Starbucks, Inc., was one of the first national chains to incorporate the technology, and they reported tremendous customer satisfaction with it.
The users activate the loaded app, and after the purchase items are scanned into the cash register computer, the users simply tap their mobile phones to the bar code scanner that reads the electronic payment information. If funds for the purchase are available, the payment is automatically debited from that card’s available balance, the user takes the receipt and walks away with the purchased item.
Overall, both retailers and consumers have fully enjoyed the convenience and reduced wait times because of the quick process the technology engages. However, as technology advances, so do hackers capability.
Google Wallet leaked credit card information to receiving units last year and allegedly resulted in hundreds of thousands of fraudulent purchases from fake, duplicate electronic cards. Google quickly sent a patch to its Wallet users, and that largest but not sole instance hasn’t slowed progress at all.
ABI Research estimates that by 2016 approximately 85 percent of all retail terminals will incorporate NFC technology that allows “m-pay” or mobile payments.
Square, a mobile payment processing app, processes $6 billion annually, growing steadily since its inception in 2009.
PayPal, the world’s largest online payment processing organization, purchased by eBay last year, is about to unleash PayPal Here, an NFC app that debits directly from the mobile phone user’s PayPal account. PayPal has over 110 million users worldwide and processes more than $118 trillion in online payments annually.
Three major banks, Capital One Finance Corp., J.P. Morgan Chase & Co. and Barclays, all of whom comprise the three top credit card issuers in the world, all have their NFC technology either in the works or already in use.
Placecast just announced on June 27th their ShopAlerts Wallet that can not only process payments but also send shopping alerts on sales and discounts on programmed ‘watch’ items. Placecast is exploring the possibility of selling its platform directly to retailers, credit card companies and carriers. Placecast boasts that on small, regional scales through UK mobile provider O2 and the US mall’s DDR, their service already boasted 10 million users who opted in to receive offers. Its from that base that Placecast is considering the m-pay roll-out offers.
Using Google Wallet as only one example, concerns circle wagons around security and financial management techniques. Not all retail systems recognize the credit logo on debit card processing, and the escalation of transaction fees can mount quickly. The Bluetooth-type of technology might theoretically broadcast the electronic card information, though most systems use highly encrypted logarithms and other security measures.
In a debt-ridden world, will m-pay popularity ring in a no-cash age, or will it backfire toward careless financial management from the ease and convenience of mobile phone use?
by Jaye Ryan, a freelance apps who loves to combine writing about mobile technology and apps for MobilePhones.org.uk.