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tech to watch
What Is It?
Your wallet’s days are numbered. 2011 will be the year when
people start to use their mobile phones to make payments
instead of cash or debit cards. Want two billboards explaini ng
why? Both Apple and Google are expected to make Near Field
Communication (NFC) chips—the tech that makes swipe pay-
ments possible—part of their next-generation platforms. Plus,
banking institutions such as Bank of America and CitiBank are
working to embed the short-wave devices i nside or on the
surface of smart phones.
Need more proof that mobile payments are ready? AT&T,
T-Mobi le, and Verizon Wireless have partnered with Discover
and Barclaycard to create a national mobile commerce network
called Isis that will also leverage NFC technology on cellular
devices for swipe-and-pay convenience. A nd last fall Sprint
announced plans for cell phone software that consolidates
accou nts from multiple credit and payment compa nies.
At the same time, startups including MobilePay USA and
such established players as PayPal are hoping to let us swap
that leather for smarter, more capable apps.
Why It Is Important
While mobile payments are hardly new, the industry is
approaching a renaissance of sorts. PayPal, already a leader
in on line pay ments, has placed significa nt emphasis on its
mobile payment businesses. The company expected to earn
$700 million in 2010 from this new breed of transaction. Ju niper
Research predicts that the value of mobile payment transac-
tions will more than double from less than $100 billion in 2010
to $200 billion in 2012. Fueled by the continued growth of smart
phone usage a nd the proliferation of new payment options, the
firm says transactions will total $630 billion by 2014.
Forecasts like these are leading cell phone carriers, credit
card companies, bankinginstitutions, and otherstojump aboard
the mobile payment wagon. But they’re not the on ly ones. Square
recently introduced an add-on for iOS and Android devices that
gives independent workers and micro-businesses (e.g ., entrepre-
neurial jewellers, baby sitters, dog-wa lkers, smal l local business
owners, etc.) a means to circumvent the hassle of installing credit
card processing equipment and paying expensive fees.
One emerg ing strateg y to lure both con-
sumers a nd mercha nts is the consolidation of
loyalty rewards prog rams with in mobile pay-
ment solutions. FaceCash is an app for Android,
BlackBerry, and the iPhone that lets users
pre-load funds into a special app-connected
account that can be used to make payments at
the cash register. Another startup, MobilePay
USA, offers loyalty program tracking as well.That
app combines smart phone-enabled payments
with a location-aware app that simultaneously
allows users to check into a retailer and pay
for purchases with a few taps.
hoW It WIll Change your lIfe
Though carriers a nd financial compa nies
are becoming in-
to embrace mobile
ers are not sobullish.
Forrester released a
showi ng that on ly
18 percent of U.S .
Internet users are
interested in pay ing with an electronic
device either in store or on line.
DerekKerton, an analystfortheKerton
Group agrees: “I would say [ paying with
a swipe] is a very small improvement, but
it’s not going to move a lot of people.” So
howcan a technologythat makesiteasier
to pay but doesn’t offer much beyond a
credit card change your life?
“T hefactthatyourphone isa connected
device with the Internet, a keyboard, and
of things,” says Kerton. He goes on to offer
the example of a shopper buying a new
sweater that costs $90. With a smart phone
connectedtoacreditcard orbank account,
the customer would swipe his or her phone
and receive a credit spending alert that
says “You are nearing your spending limit
with this purchase. Are you sure you want to continue?”
Both the FaceCash and MobilePay USA apps offer unique
advantages: For one, retailer software takes just seconds to
install and set up (it also eliminates another obstacle for mer-
chants: extra equipment).Andloyaltytrackinghelps consumers
and merchants keep track of valuable shopping information.
MobilePay USA will be available for A ndroid and the iPhone
in early 2011, and FaceCash, currently on trial at Subway
restau ra nts in California, is available for dow nload now.
The largest possible splash could be made by the two big-
gest smart phone heavyweights. Both Apple and Google are
not only investigating ways to embed NFC chips into future
handsets but were ru mored to be sizing up mobile
payment company BOKU for a n acq uisition.
After many false starts, mobile payments are
set to trace a rising slope in 2011. And
although there are a lot of companies
trying to make this concept a reality, it
could be Apple or Google (or both) that
make everyday consumers second-guess
the value of their physical wallets. “I f you
look at the smart phone arms race, once
one big 900-pound gorilla company
adopts a tech, the others all follow suit,”
Mobile Payments Arrive
Your phone is (finally) your wallet
moBIlepay usa app
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