Attempt at your own risk: For an entire week, I left all my cash and credit cards at home to see how well wallet-free mobile services work in the real world.
Apple Pay has gotten a lot of attention in recent weeks, but there are lots of other mobile-payment systems. Google Wallet uses a similar wireless technology called NFC, or near-field communication. Starbucks and Dunkin’ Donuts have apps that generate bar codes for their stores. A phone case called LoopPay mimics the signals produced by card swipes so you can pay with your phone just about anywhere credit cards are accepted — at least in theory.
The good news: I didn’t get arrested for failing to pay my debts. But on two occasions, friends had to buy me drinks. Another night I had to borrow $43 in cash. And I prepaid for drinks at one bar because I couldn’t leave a card to keep the tab open.
I know many people aren’t going to leave all cash and cards behind, even once these payment systems take off. I did it to challenge myself to find places that accept them.
PROS, CONS OF MOBILE-PAYMENT SYSTEMS
The week began on Sunday, Nov. 2, the day of the New York City Marathon. Apart from subway rides, my expenses were included with my $227 registration fee. But when it came time to celebrate, drinks at the local bars I went to required cash or plastic. Fortunately, I was able to use the “I just ran a marathon” excuse on friends. Fast forward to the end of the week, when I used the last ride on my transit card and had to walk 2.5 miles home from a “Sesame Street” exhibit. By that time, I was already wearing jeans to work because I couldn’t use coins for laundry.
So what did I discover?
Many smaller merchants probably have the right equipment, but don’t know it.
MasterCard’s Nearby app has a database of locations where customers have successfully made NFC payments, such as with Apple Pay, Google Wallet and Softcard. Included are a few dozen retail chains that have signed up with Apple Pay. But I was surprised to find many locally run restaurants, nail salons, doctor’s offices and other smaller businesses, too.
However, when I went to those businesses — a diner, a Thai restaurant, a deli, a wine shop and coffee shop — employees knew nothing about NFC. MasterCard says many equipment makers and payment processors still have to get the word out to merchants. With some equipment, it’s not obvious NFC payments are accepted until you tap the phone.
So even though lots of smaller merchants are expected to get NFC-capable equipment within the next year because of security-driven upgrades to credit and debit cards, they’ll need to be made aware of this feature. And they’ll have to train their workers on how to use it.
Things will get smoother.
When I started testing mobile payments two years ago, I had a frustrating time getting the Dunkin’ Donuts app to work. But in the past month or so, it has worked flawlessly. The same is true with Starbucks’ app. It’s clear employees at both chains have gotten used to mobile payments and how to scan the bar codes on the apps.
Likewise, when I used Apple Pay at McDonald’s on the day of its debut, I had to try a few times as the employee looked befuddled. Just two weeks later, the woman at the register was able to guide me on where to place my phone. She told me she’s seen a couple of people do it.
Even without formal training, customers and merchants will get more comfortable over time as they see others work out the kinks.
I need to lower my expectations.
In my experience, these systems don’t always work on the first try. With LoopPay, for instance, I’m supposed to hold the back of my phone case near the retailer’s magnetic card reader and then hit a button on the case. But after multiple failed attempts at a restaurant, I had to borrow money. So when LoopPay did work on the first try at my dentist, I was elated — though it meant I was out $2,500 in a flash.
I also realize it’s going to be tough to get mobile payments working everywhere. It’s one thing to leave cash or cards on a tray for waitstaff. It’s another to have to get up from the table to verify a transaction with a fingerprint or demonstrate how to hold the device. OpenTable and Harbortouch have apps to enable Apple Pay at the table, but they work only with a few restaurants.
Plastic or …?
Although mobile payments aren’t easier than whipping out plastic in many circumstances, I am glad to have Apple Pay for cab fare. My phone is generally out anyway, and I don’t have to worry about dropping an ID or keys as I pull out my wallet. It’s also nice to leave behind store-specific cards, such as Starbucks’, to thin out my wallet.
I do plan on continuing to use mobile payments, but I’ll bring cash and cards along, too — just in case.
And that reminds me: I still need to pay my friend back now that I have money again.
BY ANICK JESDANUN, AP Technology Writer
PROS, CONS OF MOBILE-PAYMENT SYSTEMS
Wireless? Bar codes? What’s the best way to pay with your phone?
Apple Pay, Google Wallet and a few other services use a wireless technology called near-field communication, or NFC.
With Apple Pay, the phone unlocks automatically when you hold it near the NFC reader on the merchant’s payment system. You’re then prompted to scan your fingerprint to authorize the transaction. Google Wallet isn’t quite as fast, as it requires a passcode.
Some big merchants including Wal-Mart, CVS and Rite Aid are developing their own systems based on bar codes. Some have even disabled their NFC equipment in the meantime. Their system, CurrentC, is expected to debut next year. For now, bar-code payments tend to be made through apps for specific stores, such as Starbucks.
NFC transactions tend to be faster to complete but it takes time to get used to how to hold your phone in relation to the reader. With bar codes, you need several maneuvers to get to the right section of an app, but the practice of scanning a bar code is more familiar to people.
Here’s a look at various mobile-payment options:
This NFC system from Apple Inc. has gotten the bulk of the attention — and for good reason. It’s easy to set up and use, and it works with a variety of credit and debit cards. Beyond paying at stores, you can use Apple Pay to make online purchases within apps without having to re-enter your billing and shipping information.
Pros: It’s secure because your number isn’t stored anywhere. It uses a substitute number that hackers won’t be able to do anything with unless they also have your phone and your fingerprint.
Cons: Some cards don’t work yet. And you have to pony up for the latest Apple device: In-store payments require an iPhone 6 or 6 Plus. App payments work only with those phones and the latest iPads.
This service was one of the first to use NFC. However, Google Inc. had trouble getting credit card issuers to support Google Wallet. Now, Google essentially creates a MasterCard debit account on your behalf, and your regular card is charged on the back end. Unlike Apple Pay and its fingerprint ID, Google Wallet requires stopping to enter a passcode.
Pros: With few exceptions, it doesn’t matter which card you have.
Cons: It works only with some Android phones and tablets. Not all vendors accept MasterCard debit cards. You might lose out on some rewards and other benefits your card offers because the transaction is indirect.
This NFC system was developed by three of the leading wireless providers: Verizon, AT&T and T-Mobile. Unfortunately, it works with so few cards that the most practical way to use it is to set up a prepaid account, defeating the purpose of having a “credit” card.
Pros: Apps are available for Android and Windows devices.
Cons: It works with few cards (American Express, Chase and Wells Fargo only). For the prepaid account, the fine print warns of various fees.
You tap your phone similar to NFC, but this system actually reproduces the signals from a magnetic swipe, so it should work with existing equipment.
Pros: It works with more cards and merchants than other mobile systems.
Cons: You need to buy hardware, such as a phone case with the LoopPay transmitter in it. It has trouble with some older readers, as well as transit fares, parking meters and other machines that require you to fully insert a card, like a bank ATM. (With NFC, equipment is newer and designed for it, though you have occasional problems with the capability turned off for some reason.) Under LoopPay’s default settings, someone can go on a shopping spree if your phone is lost or stolen.
There are several ways to pay with PayPal’s app. For food, you typically order a meal for pickup or delivery and pay online ahead of time. For retailers that accept in-store payments, you typically authorize that merchant on your app, and the merchant chooses your photo after it appears on the cash register. In a few cases, you provide your phone number and PIN at the retailer.
Pros: You can make payments through your bank account, not just cards. You can also send money to friends.
Cons: It’s confusing because different merchants require different methods of completing the payment. Few merchants accept in-store payments.
Apps for many retailers including Starbucks generate bar codes that can be scanned at the register. Money is deducted from a store gift card or credit card.
Pros: Bar-code technology is familiar. These apps also link to stores’ loyalty programs for rewards.
Cons: It takes more steps to create a bar code than tapping with NFC. Bar codes and apps tend to be store specific. An upcoming system called CurrentC promises to unify bar codes for leading retailers, but the initial focus is on bypassing credit card transaction fees by linking directly to your bank account, so most credit and debit cards won’t work with that system.