Companies struggle to popularize mobile money

March 1, 2013 by Peter Svensson
In this Feb. 27, 2013 file photo, a man uses the NFC communicate library system at the Mobile World Congress, the world's largest mobile phone trade show, in Barcelona, Spain. (AP Photo/Manu Fernandez)

Mobile money may seem like a hot concept, but consumers aren't warming to it. At the world's largest cellphone trade show, here in Barcelona this week, the 70,000 attendees are encouraged to use their cellphones —instead their keycards— to get past the turnstiles at the door. But very few people took the chance to do that. The process of setting up the phone to act as a keycard proved too much of a hassle.

It's a poor omen for an industry that's eager to have the cellphone replace both tickets and credit cards. Companies are building chips antennas into phones that let the gadgets interact with "tap to pay" terminals and other devices equipped with short-range sensors, like subway turnstiles. But getting the technology to do something useful and convincing people to adopt it is a slow process.

To make a payment in a store with your cellphone, "you need a lot of things to align," said Reed Peterson, who heads the Near-Field Communications initiative for the GSM Association, a global for the wireless industry. The needs to be properly equipped with NFC hardware and software; the store needs to have the proper equipment and training. The phone company needs to support the transaction, and banks and need to be in on it.

Some of these things have fallen into place, Peterson said, but the network of commercial agreements that supports these payments needs to expand. And consumer demand remains elusive.

"I want to get to the point where the consumer goes into the store and says 'Show me only the phones that have NFC'," Peterson said.

Today, a buyer is quite likely to go into a store and ask for an , and that's an obstacle to NFC adoption. Apple Inc. is the lone holdout among major smartphone makers, and hasn't built NFC into any of its devices yet.

Visa, the global payments network, announced a coup at the show: it has struck a deal with to take charge of the "secure element" in the next flagship phone from the South Korean company. The Galaxy S IV is expected to be launched at an event in New York on Mar. 14, though the name has not been confirmed.

The "secure element" is sort of like a safe inside the phone. Whoever controls access to it decides which credit cards, transit passes or other verified "documents" the phone can store. A bank that wants to let customers use their Samsung smartphones as virtual credit cards will have to go through Visa.

Control of the secure element is a crucial battleground for NFC. The GSMA, which is dominated by carriers, advocates putting the secure element not in the phone itself, but in the subscriber identity module, or SIM card, which plugs into the phone to identify the user and supply a phone number to the network. SIM cards are issued and controlled by the carriers who would like to be the ones in control of the secure element.

While Visa, phone companies and Google (which has its own payment initiative) duel over the secure element, eBay Inc.'s PayPal is wondering what all the fuss is about. The online payment network thinks NFC is a lot more trouble than it's worth. The company isn't afraid to say so at the wireless industry tradeshow.

"If you want to change something, you have to solve problems that people have in everyday life," said David Marcus, the president of PayPal. "It's not like everyone is thinking 'Oh, I wish someone came up with something better'" than paper money and .

PayPal is putting a lot of effort into making cellphones central to the way we shop, but is focusing on the shopping experience itself, rather than payments. The company's ideal vision for buying a cup of coffee: You pull out your phone on the way to the store, fire up PayPal's app to order your double-skim latte and pay for it in advance. When you arrive at the counter, the barista has your picture and your coffee, and gives it to you right away. Then you're out the door.

Thirty years ago, Marcus said, store clerks knew the people in their neighborhood and greeted them by name.

"We think with this technology, we could recreate that personal connection," he said. "We feel this is going to leapfrog the efforts of NFC."

Explore further: Visa, Samsung in global deal for mobile payments


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1 / 5 (5) Mar 01, 2013
" You pull out your phone on the way to the store, fire up PayPal's app to order your double-skim latte and pay for it in advance. When you arrive at the counter, the barista has your picture and your coffee, and gives it to you right away. Then you're out the door. "

Fuck PayPal. Use Bitcoin or ripple.

Whether you like bitcoin or not, banking payment protocols and implementations should be free and open-source software. Nobody would think it would be normal for a company to control the email protocols and software. Why is it different for banking?
2 / 5 (4) Mar 01, 2013
Whether you like bitcoin or not,

I opt for 'not'. Given that it's already been hacked into oblivion I have lost trust in an electronic currency (actually I never had any trust in electronic currency to begin with).

Use cash. There's nothing wrong with that. And it gives you a much better sense of how much you're spending in a given month. Also I don't like the traceability/profiling that can be done when you use electronic currency.
1 / 5 (1) Mar 01, 2013
fire up PayPal's app ... and pay for it in advance.
There's no way this will fly. By the third time you do that, the guy says "sorry, we're fresh out of your coffee". Then what? A major hassle to undo the payment and pay for something else? And a queue behind your back sighing and clicking tongues.

Use cash. There's nothing wrong with that.
Well, in my home town everybody uses a debit card. The result? Nobody gets robbed anymore! The average person has less than 5e worth of money on them.

Given that it's already been hacked into oblivion I have lost trust in electronic currency
Agreed. Those who want me to pay with my phone will have to jump through hoops and walk on water before I even consider it.
1 / 5 (1) Mar 01, 2013
Besides, only providing the software app for Android and either Windows or Apple phones, will not be enough. There is a growing number of other phone operating systems coming out Real Soon Now. I can't really imagine Visa and others bothering with more than their favorite two OSs, three tops.

So, the day when everyone will or can pay on the fly with the phone, will never come.
2 / 5 (4) Mar 01, 2013
Well, in my home town everybody uses a debit card.

There's some places where this works well - others not so much.

In France paying with debit cards is the norm and is incredibly quick. Here in germany people groan when someone takes out their card (which, unfortunately, is an ever increasing percentage of customers) - because the time to:
- slot it
- wait for card to be recognized
- type the pin
- wait for confirmation
- print out receipt
- sign it
- hand it back to the cashier
- check the signature against the one on the card
- hand card back to the customer

...takes about three times as long as a simple cash-change-receipt transfer.
5 / 5 (1) Mar 01, 2013

- print out receipt
- sign it
- hand it back to the cashier
- check the signature against the one on the card

Debit cards (or cards in general) that require signature? It's like the 90's all over again...
5 / 5 (1) Mar 01, 2013
PIN and a signature? Most stores in the USA allow small credit purchases without a signature. The place I buy my diesel, even with a $100 purchase, no signature or PIN required. Doesn't get any faster.

Even my wife, who is an early adopter of technology, won't use her cellphone for purchases.
1 / 5 (1) Mar 01, 2013
Isn't BitCoin suppose to be non traceable.?
not rated yet Mar 01, 2013
Supposed to be but doesn't work out as practically as theorised. I think it was not because of Bitcoin but because of the way people work with it that makes it traceable.

Not to mention the internet as implemented in the last decade has made it less convenient to disguise your interactions.
3 / 5 (2) Mar 01, 2013
No thanks. Cash.
Big Bro won't ever watch me.
not rated yet Mar 01, 2013
Debit card is the way to go in Finland also, with chip and PIN. With that you always have a exact change and the transaction takes the same time without anybody counting the coins and bills. It was much more expensive for Germany than Finland to move to Euros, because in Germany they had to print so much more banknotes, because percentage of money transactions that are in electronic form (account->account and card->account) is much bigger in Finland, so less banknotes are needed.

I hardly ever use money in stores, for the last 10 years. I use ATM to get cash maybe 1-2 times per year, or less. Salaries go directly to persons accounts. Reoccuring bills for electricity or water are billed directly from my account. I just receive a notification in advance. I have never used personal checks. It's been debit card use for me for last 25 years or more.

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