Mobile Wallets: Moving Shopping Into the Future

A more secure and convenient way to make payments
These days, most transactions don’t involve physical money, so why should they involve physical wallets? Thanks to new technologies like Samsung Pay, Android Pay (formerly Google Wallet) and Apple Pay, you can now use your smartphone to securely make transactions without ever having to take out your credit card.

According to the latest survey data from market research firm CMB, only about 15 percent of smartphone users actually utilize these technologies to pay for purchases, but usage nearly doubled from 2013 to 2015 and will likely continue to rise over the next few years as the benefits of mobile wallets are better understood.

If you are not sold on the idea of joining the new trend, here’s why you may want to reconsider:

Ease of use
A mobile wallet is an app that can be installed on a smartphone, or may even come pre-installed. Investopedia explains how they work: “Once the app is installed and the user inputs his payment information, the wallet stores this information by linking a personal identification format like a number or key, QR code or an image of the owner to each card that is stored.”

You may also have to contact your financial institution to allow the mobile wallet app to use the payment card. Once everything is set up, the mobile app uses a radio-based technology called Near-Field Communication (NFC) that communicates with the merchant’s point-of-service terminal. In other words, you only need to wave or hold your device over a store’s reader to make a payment.

Security
Because mobile wallets use encrypted payment codes and never actually transmit your account number, they are much safer to use than credit cards. In addition, paying with a mobile wallet requires your fingerprint or personal identification number, so even if a thief managed to get their hands on your smartphone, they would have a much harder time spending your money than if they had stolen your credit card.

“Even if a thief bypassed all the security, the risk to you is low,” Jeff Blyskal writes in an October 2016 article for Consumer Reports. “Mobile wallets usually require an underlying credit or debit card to fund transactions, and those cards limit your liability for erroneous or fraudulent charges to little or nothing.”

Convenience and incentives
Mobile wallets can be used for more than just emulating credit and debit cards. “In addition to payment cards, the mobile wallet can also be used as a storage device for driver’s license, Social Security Number, health information cards, loyalty cards, hotel key cards and bus or train tickets,” Investopedia explains.

Thanks to mobile wallets, you can carry hundreds of rewards cards virtually, making it easier to keep track of the ones you own and to remember to use them. You can even use mobile wallets to make online payments, removing the need to tediously enter dozens of digits for each transaction.

You can also save money with various reward programs. For example, Android Pay offers rewards for using the app at selected partners, while Samsung Pay offers a tiered rewards system based on how many monthly purchases you make with it.

Widespread adoption
So far, the main obstacles faced by mobile wallets are the different payment methods. While almost all modern smartphones will support Samsung Pay, Android Pay, Apple Pay or a combination of these, all three of these apps may not necessarily work at all retailers.

“Samsung Pay can be used at more than 10 million U.S. stores, Apple Pay at more than 3 million stores, and Android Pay at more than 1 million stores,” Blyskal says. “The numbers will grow as retailers upgrade their payment card readers.”

Being able to use Samsung Pay at more than 10 million stores easily makes it the most attractive of all the mobile wallets, but you have to own a Samsung smartphone to use it. The upside is that it works everywhere: according to Ethan Wolff-Mann in an October 2015 article for the Time’s Money, “[Samsung Pay] works everywhere, since it can mimic a magnetic strip if NFC technology is unavailable; retailers don’t get your credit card info.”

This doesn’t mean that Samsung will continue to be the best option for smartphone owners interested in mobile wallets, as both Google and Apple are strongly invested in using this technology to sell smartphones and will continue to implement rewards for using them. Furthermore, using a mobile wallet speeds up transaction times, which gives retailers extra incentive to adopt NFC-capable card readers.

For the time being, mobile wallet adoption across retailers may still not be good enough to leave your credit card at home. In the future, however, it’s very likely you’ll never need to go out shopping with more than just your smartphone.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

The End of the Wallet as we Know It?

Smartphone payment apps allow you to leave your card at home

For years, consumersaofcu_pic_003047337 have had the capabilities to use apps on their smartphones to pay for items in the modern-day marketplace. Recently, this technology has begun catching on, with Internet start-ups and financial institutions scrambling to capitalize on this revolution.

“Every device will become a commerce device,” said Gary Flood, president of global products and solutions for MasterCard, to the Boston Globe. “Technology is opening up the potential to do things in a different way around the world.”

A recent survey found that more than 60 percent of people expect that mobile devices will soon replace cash and credit cards. There are many different smartphone apps that offer the abilities:

Google Wallet
This app allows you to e-mail money via gmail and link your phone to your credit and debit cards and checking account to use anywhere contactless payments are accepted. Positive aspects of Google Wallet are the ease of set-up — it takes about five minutes to create a secure PIN number and enter your personal information, including account info — and the inclusion of Google Offers, which informs you of deals and coupons at nearby places at which you may be shopping. The PIN safeguards your account from breaches, and the software’s cloud connection allows you to shut down your Wallet from a computer if your smartphone is lost or stolen. There is a fee for using credit and debit cards through Google Wallet, but checking account payments are free.

Square Cash
This app only works with debit cards, with no fee involved, and you don’t even need an account with Square to accept money this way. This makes it ideal for splitting a bill with friends, for example, or chipping in for rent. Pay with Square is an app that allows you to pay simply by saying your name. Through the app, you can find Square-enabled businesses nearby, which utilizes your phone’s GPS, and before you head into one of those stores, you hit “Open a Tab.” From there, you go into the store, grab what you want, and tell the cashier your name. The only problem is that you’re often identified by pictures in this case, and online photos can be blurry which can lead to potentially costly confusion.

Venmo
This popular app helps friends to pay each other, but it is a pay-by-text service. Checking and debit options are free with this app, but there is a fee for credit card transactions. Set-up is quick and easy, with a text confirmation for extra security, and you can connect to the service through your Facebook account as well. This will help you find friends that are also signed up for the service. Venmo’s connections with Facebook don’t end there. The Wall Street Journal’s Joanna Stern explained the service’s fun social qualities.

“As soon as you open the app, there is a Facebook-like newsfeed of your friends’ transactions — hotel rooms, Indian food and cab rides are just a few things my friends seem to be paying for with Venmo,” she said. “You can then comment or ‘like’ the update. Fortunately, the amount paid isn’t public and you can disable the sharing features on each transaction.”

To use Venmo, you just enter the amount you want to pay, identify the recipient by name, phone number or e-mail, and click “Pay.” There is a limit, however, on much you can send per week and per month.

LevelUp
This app allows you to link to your debit or credit card, while also linking to various stores’ loyalty cards. The app offers built in discounts and says its users save around $25 a month by using its service. Like many of the above options, set-up is simple by just entering your card number. Scanning your card with your phone’s camera doesn’t always work, said CNN Money’s Laurie Segall, who tried out all of these applications for a 2012 story.

To pay, on participating merchants’ LevelUp-provided devices, you just scan a code displayed on your phone after you hit “Pay.” It all works within seconds.

Paypal
This is probably the most well-known of all of these, allows you to completely scrap your phone altogether and pay with just a phone number and PIN. You must remember to first go into your Paypal account and enter your mobile number. Even if there is already a number on file, the mobile number needs to be specified. Then, at the payment device, all you have to do is enter your number and the PIN. For extra safeguards, Paypal texts you after every transaction to let you know there was a purchase. Paypal is great because it is a commonly used service that most people already have for shopping online or for international transfers. But beware of the fees, they are charged for every service (credit and debit) except for the checking account.

Store loyalty cards are a widely used option among retailers that allows you to prepay money or attach an account to them while also accumulating points or perks. Over a quarter of Starbucks customers either pay with a digital or plastic loyalty card, the company disclosed. That also means that Starbucks has reduced its cost of processing purchases by 25 percent. Typical merchant fees for a regular debit card transaction are around 4 percent, while use through loyalty cards and apps like those above can reduce the fees to 2 percent or even make them disappear altogether.

A similar option to those mentioned previously includes the Tango Card, which allows consumers to securely store gift cards and then generate a barcode for their use at the register. Also, Uber is an app that enables a user to pay for a town car or a taxi through its technology linked to credit or debit accounts. Many parking garages, parking meters and vending machines across the country have gone the “touchless payment” route as well.

Going forward, technology will be making even greater strides. NXT-ID, Inc. is developing a means to replace all the cards in your wallet with no smartphone required. The Wocket™ is its own device; it will work anywhere credit cards are accepted, and only with your biometric consent. See an official presentation about the Wocket here: https://www.youtube.com/watch?v=h2zPNB5i9CA.

All of these technological advancements are not without their problems, however. Security really is not a concern, as most of the aforementioned services are more protected than your own actual wallet! The main issue with digitized payments is that the systems are not synchronized. One app doesn’t work everywhere, or with every point-of-sale device. But that, too, may be a problem of the past. Scvngr, the operator of LevelUp, is working on a single POS that will allow merchants to accept any mobile payment app.

“Until you solve that particular problem, you can’t really drive much widespread consumption,” said Will Graylin, founder of ROAM Data, a premier mobile application and payment services company.

As Graylin indicated, it will be a while before there is extensive adoption of the mobile wallet, but be aware of increased spending when this future is upon us. These apps and devices certainly increase convenience, as software can track spending and balances with the push of a button, but they also increase sales, with GPS tracking helping to notify you of sales and discounts near you. Individually, these technologies have their own pros and cons; each is best used in different places and under varying circumstances. Therefore, it’s solely up to your discretion if next time you go shopping, you want to leave your wallet at home.


Used with Permission. Published by IMN Bank Adviser
Includes copyrighted material of IMakeNews, Inc. and its suppliers.

The ABCs of E-Payments

The Internet has brought about a world of convenience. You can chat with people from around the world; search and apply for jobs; and, of shutterstock_73863952course, purchase goods and services with just a few clicks of the mouse. As the popularity of purchasing goods and services online continues to grow, so too do the number of methods people are using to pay for them. Though debit and credit cards are still the most popular types of electronic payments, or e-payments, other payment methods have been developed:

Electronic money (e-money)
You can’t go into a pharmacy or retailer today without noticing gift cards, which can be used online. These gift cards are examples of e-money. Another type of card is a stored-value card. These types of transactions are common with public transportation passes or telephone cards. Note that some stored-value cards can be “reloaded” at cash machines or by the merchants, while others are simply thrown away after their use. Some of these cards may also be “smart cards,” which means you can use them as either credit cards or debit cards.

E-wallets
According to the FTC, “some Internet-based payment systems allow value to be transmitted through computers.” These are called e-wallets and are usually for making small online purchases, such as coffee or magazines. Transactions made with e-wallets may be accessed via stored value or through an online account.

Protect yourself
As with any type of electronic banking, it’s important to take steps to ensure that your money and your personal information are protected. The FTC offers these tips:

  • Deal with businesses you know and trust: And make sure you’re entering personal or financial information where it should be – on an order form.
  • Read the merchant’s privacy policy before you make any payment: This will help you determine what information they will need and how it will be shared with others. If you are uncomfortable with a policy, don’t make the purchase.
  • Guard your personal information: Be careful when giving out your address, telephone number, Social Security number, account number or e-mail addresses. Remember that some scam artists may pose as merchants you do business with and ask for this information online. Before giving out information, contact the merchant by phone or via the website to verify that the merchant is requesting your information.
  • Check your browser: Is your computer’s Internet browser, which encrypts information you send over the Internet, up to date? Be sure to check with the creator of the browser and download the latest version. Also, every time you purchase something online, watch for the lock symbol and the letters “https” in the URL of the website. These show that you have a secure connection.
  • Read the fine print regarding returns and shipping: This type of information should be available on the merchant’s website.
  • Never give out your password to anyone online: Also don’t choose passwords that are easy to guess, such as your address or phone number.
  • Do not download files from strangers or click hyperlinks: These may contain viruses or programs that capture information in your computer.
  • Watch your account activity: By monitoring your accounts, you’ll be able to detect fraud. If you notice an unauthorized transaction, report it immediately. And if your card is stolen, report it immediately.

Know your rights
According to the FTC, the Fair Credit Billing Act (FCBA) and Electronic Fund Transfer Act (EFTA) offer protection from the following:

  • Charges or transfers that you or anyone authorized to use your account have not made
  • Charges or transfers that are improperly defined or have the wrong purchase amount or date.
  • Mathematical or similar errors
  • A creditor’s failure to properly reflect payments, credits or electronic fund transfers
  • A creditor’s failure to deliver credit billing statements to your current address, provided you sent written notice of your address 20 days before the billing period ended
  • Credit charges or electronic fund transfers for which you have requested an explanation or documentation due to possible error

Learn more
If you have any questions about your account activity or making online payments and purchases, give us call – we’d be happy to help


Used with Permission. Published by IMN Bank Adviser
Includes copyrighted material of IMakeNews, Inc. and its suppliers.