The Future of Mobile Contactless Payments

With the introduction of Apple Pay last week, contactless mobile payment has just jumped into the mainstream public eye. Yes I’m aware that Google Wallet has been working with contactless payments on Android phones for years now, but there’s no denying the fact that Apple has only recently brought more attention to the idea of paying for things in physical locations with your cell phone. But not all retailers are jumping onto the Apple bandwagon this time around and it’s probably going to bite them in the ass.

First of all let’s talk a little bit about how Apple Pay works, in the most general way possible. On the surface it’s the same way that Google Wallet works and the same way that your contactless credit cards work. Basically you store credit card information in your phone (or not technically IN your phone, in Apple’s case), which then allows you to hold your phone near an NFC capable credit card reader, and pay for your purchase. That’s the basics of it. There’s a lot more that goes on in terms of security and backend processing and such, but for the sake of this article, that’s how it works.

Apple Pay and Google Wallet use the same method for allowing the payment to be made from your phone. The technology utilized by both payment systems is called NFC, or Near Field Communications. It’s basically the system that allows your phone to talk to the credit card reader. And that’s why, even if a store is not “officially supporting” Apple Pay, as long as the credit card readers are setup for NFC, then you can use Apple Pay to pay for your purchases. Stores like Home Depot, which are not official Apple Pay supporters, still allow you to pay for products using your iPhone. However a few stores have come out recently saying they will not accept Apple Pay, and some of them are even refusing Google Wallet payments now.

Wal-Mart , Best Buy and CVS are the two big ones that have been named recently that are refusing to accept Apple Pay payments even though all of their stores are setup with NFC capable credit card readers. In fact, CVS was working fine with Apple Pay up until a few days ago, when they decided to shut down their NFC readers completely. Best Buy has actually had their NFC readers turned off on their terminals for a long time now, so that’s nothing new.

Why are these companies turning off their NFC readers and disabling Apple Pay (and Google Wallet), you ask… It’s because they are trying to bring a new form of mobile payment to the forefront that helps cut out credit card fees from all transactions. Of course this has nothing to do with saving the consumer money, it’s just a way for the retailers to not have to pay the credit card companies a percentage of each sale. And on top of that, the new system will track all customer purchases and habits, allowing the retailers to retain data on all of their customers.

This new system that Wal-Mart, Best Buy, and CVS (among others) are trying to standardize is called CurrentC, and it’s a terrible process. This is not the future of mobile payments.

The way it will work is that when a customer checks out, a screen in front of them will display a QR code which the customer must scan with their phone. Their phone will then present another QR code that the cashier must scan in order to accept the payment. How is this better than just holding my phone close to a credit card reader and verifying my finger print? It’s not. And it uses QR codes, technology that should have disappeared years ago. Nobody wants to scan a QR code for anything, let alone to make a payment with their phone.

Apple Pay and Google Wallet combined with NFC for mobile payments may not be the answer to ditching our credit cards quite yet, but I can tell you with 100% confidence that CurrentC and QR codes are definitely not the answer. I would rather take out my credit card and use that to make a purchase at Wal-Mart or Best Buy than use CurrentC. But in all actuality, I don’t ever shop at Wal-Mart and would rather use Amazon instead of Best Buy… so I don’t think I’ll ever run into an issue with mobile payments. I think the clear winner will be determined when they figure out the best way to use mobile payments at restaurants. That is where the majority of my purchases using my credit card take place, so once they figure that out, I’ll have more opportunities to use mobile payments. And actually, if restaurant receipts printed QR codes on them that allowed me to pay my bill that way, that might be the only way I would ever use a QR code system with mobile payments.

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