YOU WON'T NEED YOUR WALLET ANYMORE

My parents didn’t trust banks. They remembered the bank holiday of 1933. During the height of the Depression, the federal government closed all banks for eight days to prevent them from going under. The holiday allowed the banking system to stabilize, but it was inconvenient for people who wanted to draw their money out. When my brother and I were teenagers, my parents were saving for something. Instead of putting the money in a bank, they had a jar full of greenbacks on a shelf in the pantry. Eventually they opened a checking account, but they did not have a credit card for a long while, if ever. One time they flew from Florida to New England and tried to rent a car at the airport. They had a lot of trouble with that because they didn’t have any credit cards. Maybe they got one after that. I don’t know.

How times have changed! We’ve gone from cash to charge accounts to credit cards to debit cards to paying for things with a smart phone. The major technology companies are entering consumer banking, especially digital payment apps. Starbucks has been one of the pioneers in this field. Users can get apps for Google Wallet or Square wallet Android or Apple phones. All the customer has to do is hold the phone up to a scanner to pay for their coffee. Dozens of other companies, including Dunkin’ Donuts have smartphone apps. WalMart is getting in line. They have a new payment app that has been available around their headquarters in Arkansas. The company expects it to be available in WalMart stores by the beginning of summer. Their app works by taking a picture of a code on the cash register. The cashier then scans the items through. The charge is then automatically taken from the customer’s account.

Vanessa Montez, a 20-year-old college student in California uses her bank account only for direct deposits for her paycheck from her part-time job and to make debit payments. Instead of a credit cards, she uses an online alternative, Affirm. She can charge things through Affirm and make payments over three to twelve months.

Venmo, a unit of PayPal, is popular with young adults. Some of them have talked their parents into joining Venmo. It is an easy way of sending money. Older adults have not accepted mobile payments as easily as the millennials have, but the tech companies are working on them. 

Major banks are moving into this new technology. Citibank has set up a new unit to deal with the emerging technology. Stephen Bird, a senior Citibank executive said, “The long-range goal is to provide an array of banking and money management services that are as effortless to use as ordering and paying for a ride on Uber.”

What Mr. Bird does not acknowledge is that most people my age, the Over-the-Hill generation, have never used a smartphone to order or pay for a ride on Uber. All this new-fangled stuff seems pretty bewildering to me.

But whether you or I like it or not, big changes are coming to mobile payments, and we’re all going to have to get used to them. We can get a glimpse into our future by looking at Sweden, which has gone to an almost cashless economy. I’ll take a look at that next week. A few people even now in our country no long take a wallet with them. They carry just their driving license and smartphone. If that become common place here during my lifetime, I think, along with my smartphone, I’ll carry a couple of twenties in my shoes, just in case I need them

CAN I PAY FOR THAT WITH MY PHONE?

Three years ago Nick Bolton wrote about how his smartphone had practically replaced his wallet. He used a Starbucks app to pay for his coffee and Square to pay for food in restaurants. He used an Apple app to store boarding passes and movie tickets. He even used it to get into a baseball game.

Some mobile payment apps are linked to a specific business, like Starbucks. Others use NFC (Near Field Communication). You just touch the phone to a reader at the register. Still others use the phone’s QR reader to take a picture of the merchandise code. The account is linked to a credit card or checking account. This is then transmitted to a reader. Most of these systems do not access your actual account number, but a virtual number representing it. This way your credit card number is never in the merchant’s system, so it is safer.

A QR (quick response) code is a barcode arranged in a square grid on a white background.  If you take a picture of the code with your smartphone QR reader, it will open relevant information about the merchandise.

One of the best mobile pay services is Apple Pay. It has been around for about a year and a half. It uses NFC. The customer just taps the phone on the reader. The credit cards are stored on the phone  rather than on the reader at the merchant’s site. The store never gets the customer’s credit card number.

First when Apple Pay came out, some people had trouble using it. One customer wanted to pay for his lunch at McDonalds, which did accept Apple Pay, but the clerk didn’t understand it and told the customer he had to pay with a credit card or cash.

Another problem that Apple Pay had was resistance from several large companies. A lot of major retailers are building their own system (Current C), which they want to use. With their own system they will be able to reduce credit card fees. With Apple Pay, retailers will not get as much personal information about customers.

Current C has been described as clunky. Apple Pay the customers tap the reader with their phones. Current C customers scan the QR reader and then display it to cashier.

Retailers are beginning to realize that Apple Pay can bring them lots of business, so it is becoming more widely accepted. The shortcoming is that it works only on Apple phones, and only on new ones at that. However, there are all kinds of other choices: Samsung Pay, Android Pay, Google Wallet, Chase Pay, to name several.

There is a new one coming out, Wal-Mart Pay. It is available in some locations now and will be available nationwide by summer. Wal-Mart Pay will scan a unique QR code that will trigger the retailer’s app to process the payment.

All this sounds really nifty. Do you have your mobile payment app yet? No, neither do I. I might try it someday, but I’m not ready for it yet. For one thing there are too many. If I get the Starbucks app, will I be able to use it at Dunkin’ Donuts? Will the Wal-Mart app work at K-Mart or Sears? Just tapping my phone on a reader sounds easy enough, but scanning QR codes and displaying them on some kind of a reader doesn’t sound that convenient to me. It might be safer to use some of these apps rather than a credit card, but it sure doesn’t sound easier than just using a credit card.