New Entries Into The Mobile Payment Land Rush


This has been a big week for mobile payment announcements. First, a company called ClearXChange announced that they would be rolling out an electronic payment system in conjunction with Bank of America, Chase, and Wells Fargo. Their press release was long on buzzwords and short on actual payment details. This is not a technology blog, and frankly, I really don’t care what kind of radio communications are used between your phone and the terminal at your merchant. When I read these press releases, all I want to know is how am I going to be charged. There are no specifics here, but they seem to be implying that this system works kind of like a debit card. The banks are running the show, and there is no mention of any credit card network such as Visa, MasterCard, or American Express. If this is the case, you will not have any of the protections that a credit card offers, but at least you will be dealing with your bank.

It Could Be Worse

Every time I read about a proposed new mobile payment system, and that is fairly often these days, I am concerned that someone will propose a system where payments are handled through your mobile services provider. Run screaming from any such system where you are being billed by companies like AT&T or Sprint. From cramming to smurfberries, to 900 numbers, mobile phone service providers have proven they cannot be trusted to competently handle third party billing.

It Could Also Be Better

Today, Google announced a new system of mobile payments called Google Wallet. This system, which is a lot more clearly explained, uses similar technology to allow you to make credit card payments with your mobile phone. So far, they have only signed up with Citi MasterCard as well as some retailer’s gift card programs. Nevertheless, this is a promising start. As a credit card payment, you would be granted all of the same protections as if you were paying with plastic. This includes fraud and chargeback protections for items not delivered or not as described.

As soon as Google signs up more banks and retailers, this system will have some potential. It would be nice for me to have all of my various credit cards slaved to my cell phone. Then, I could use any of them on a whim, depending on which has the highest rewards for the purchase I am making. Ideally, my phone would also show me an instant readout of my balances and my payment due dates.

The Marketing Angle

The idea that Google Wallet will leverage your spending data shouldn’t surprise anyone. Indexing data is what Google does. They way they pitch it is that they will be sending you valuable coupons. This sounds suspiciously like the sneaky working in your average privacy disclosure that goes something like this, “From time to time, we may share your information with our partners in order to market you goods or services that you might be interested in purchasing.”  Right now, Google knows every search I make, every website I visit, and they even control my email. Since I use a credit card when I almost anything, perhaps I really don’t want them to know the details of every purchase I make. They call their system Google Offers. So long as we can opt out, hopefully this won’t be too much of a privacy invasion.

What To Look For In A Mobile Payment App

First, find out where the money is coming from.  It will either be coming from your credit card account, your bank account, or your phone bill. The more these companies focus on the technology and not on the payment system, the more concerned I get. Next, ask yourself what value these programs are delivering to you. So far, the most they are claiming is that you don’t have to carry around a credit card, which frankly, is not that big of a deal. I think these products would be much more exciting if they offered superior information, convenience, and protections than your credit card, but still tie into that account. We are in the earliest days of the mobile payment rush and the only thing that I can confidently predict is that it is sure to get more interesting.

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