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Effortless spending

Apps can convert your smartphone into a credit card.

Tess Vigeland: How much cash is in your wallet? Probably not much, right? You may have more credit cards than dollar bills in there. That's just how we roll these days. But one day soon, you may not even need your wallet. The people who watch these things say we are moving, inexorably, toward a cash-less society. And the best place to see that right now is on your smartphone.

Farhad Manjoo is the technology columnist for Slate magazine and he's here to talk us through what we'll call cashless apps. Welcome to the show!

Farhad Manjoo: Thanks, good to be here.

Vigeland: Let's start with the new service called Square. This was started by Twitter's co-founder Jack Dorsey. And you test-drove this service. So tell us what it is and how it works.

Manjoo: So there are two parts to Square. The part that's been around for a few years now is a little, small square device that attaches to smartphones and that allows merchants -- especially sort of, really small businesses like people who run farmers' market stands or food trucks -- to accept credit cards. So recently, they released an app called "Card Case." And what it does is it allows a customer to go to a Square merchant and buy stuff from them without doing anything essentially. Say you go into a coffee shop, you buy your coffee and muffin and you say, "Charge it to Farhad." And they see your name on the screen, because you have your phone with you, and they just tap your face...

Vigeland: Not your actual face, but your face on the computer.

Manjoo: Yes, your face on the screen. And that's it!

Vigeland: Well, I've got my phone with me right now. And I'm actually gonna go in and see if I can find Card Case and maybe you can talk me through this year. OK... I'm gonna open that up. So I'm gonna have to create a new account here. While I do that why don't you explain to us what this is gonna do for me as a consumer.

Manjoo: At the moment, Card Case is tied to your credit card account. And then there's a built-in directory in the app that tells you all of the stores where you can use your Card Case to pay for goods and services. It also it'll ask you to take a photo of yourself and that'll be the photo that'll identify you.

Vigeland: OK, maybe I'll do that later, after I've had coffee. All right, so pay with your name, open a tab of your favorite places. I've just asked it for places that will accept this near where I am... Hollywood Pies is .2 miles away. I think I'd like to go there right now.

Manjoo: That sounds pretty good.

Vigeland: Wow, there are actually more here than I would have expected.

Manjoo: I see there's a food truck near me.

Vigeland: There's one near me too.

Manjoo: So basically, you click on one of these and open a tab at one of these places.

Vigeland: OK, so I'm opening the Hollywood Pies and it says, "Enable tabs." So I would need to click on that. Oh, it's requiring my photo now. So... I'll do that later. Well, let's move on -- am I pronouncing this correctly? -- Dwolla? And this is an online payment system between people. So, peer-to-peer lending, I guess we call this? What is this?

Manjoo: Well, it's a way to replace cash transactions between people. And it links to your bank account and to people who have the Dwolla app on their phones can transfer money to one another.

Vigeland: So it's like your own Western Union.

Manjoo: Right. It works across different kinds of phones, and the goal I think with all of these companies is to move society to toward this cash-less and really friction-less way of sending money, where you don't kinda think about the money that's being passed. It just sorta happens over the Internet and it can track your purchases more easily, you have data about what you buy and there is kind of insurance for your purchases, where you wouldn't be able to get that with cash.

Vigeland: All right, well the last service that we wanted to talk about is Google Wallet. Tell us about it.

Manjoo: So Google Wallet is a kind of a lot more traditional pay-by-phone service that basically your credit card information is on your phone, and to pay for something, you wave it front of credit card pay terminals. And the other distinction is that it's not in the iPhone, so you know, that's a big part of the smartphone market and your iPhone won't work with Google Wallet.

Vigeland: So what's stopping this from becoming kind of the de facto method of payment? If I could carry around just my phone instead of my wallet and my phone -- that sounds great!

Manjoo: You know, it's hard to see that we'll ever get to a place where we could replace everything in our wallets with our smartphones. I mean, your driver's license, will that be in your smartphone?

Vigeland: That'd be great! "Here officer, here's my phone!"

Manjoo: Yeah, it would be great, but I don't think people see this as a more convenient system. It's not that big of a difference.

Vigeland: And of course, behavioral economists will tell you that it will make it much easier to part us from our money when we're not actually handing over money, because our brains actually take a moment to think about it when we're handing over cash, but they don't when we're using a credit card. And I would imagine that's even magnified if you're just handing over your phone.

Manjoo: Oh yeah. I mean, I definitely felt that when I was using the Card Case app. I mean, if people don't have to think about handing over money or handing over anything...

Vigeland: There's no pain!

Manjoo: Yeah, there's no pain at all.

Vigeland: All right, Farhad, thank you so much. This has been fun.

Manjoo: Great, thanks a lot.

Tess Vigeland: How much cash is in your wallet? Probably not much, right? You may have more credit cards than dollar bills in there. That's just how we roll these days. But one day soon, you may not even need your wallet. The people who watch these things say we are moving, inexorably, toward a cashless society. And the best place to see that right now is on your smartphone.

Farhad Manjoo is the technology columnist for Slate magazine and he's here to talk us through what we'll call cashless apps. Welcome to the show!

Farhad Manjoo: Thanks, good to be here.

Vigeland: Let's start with the new service called Square. This was started by Twitter's co-founder Jack Dorsey. And you test-drove this service. So tell us what it is and how it works.

Manjoo: So there are two parts to Square. The part that's been around for a few years now is a little, small square device that attaches to smartphones and that allows merchants -- especially sort of, really small businesses like people who run farmers' market stands or food trucks -- to accept credit cards. So recently, they released an app called "Card Case." And what it does is it allows a customer to go to a Square merchant and buy stuff from them without doing anything essentially. Say you go into a coffee shop, you buy your coffee and muffin and you say, "Charge it to Farhad." And they see your name on the screen, because you have your phone with you, and they just tap your face...

Vigeland: Not your actual face, but your face on the computer.

Manjoo: Yes, your face on the screen. And that's it!

Vigeland: Well, I've got my phone with me right now. And I'm actually gonna go in and see if I can find Card Case and maybe you can talk me through this year. OK... I'm gonna open that up. So I'm gonna have to create a new account here. While I do that why don't you explain to us what this is gonna do for me as a consumer.

Manjoo: At the moment, Card Case is tied to your credit card account. And then there's a built-in directory in the app that tells you all of the stores where you can use your Card Case to pay for goods and services. It also it'll ask you to take a photo of yourself and that'll be the photo that'll identify you.

Vigeland: OK, maybe I'll do that later, after I've had coffee. All right, so pay with your name, open a tab of your favorite places. I've just asked it for places that will accept this near where I am... Hollywood Pies is .2 miles away. I think I'd like to go there right now.

Manjoo: That sounds pretty good.

Vigeland: Wow, there are actually more here than I would have expected.

Manjoo: I see there's a food truck near me.

Vigeland: There's one near me too.

Manjoo: So basically, you click on one of these and open a tab at one of these places.

Vigeland: OK, so I'm opening the Hollywood Pies and it says, "Enable tabs." So I would need to click on that. Oh, it's requiring my photo now. So... I'll do that later. Well, let's move on -- am I pronouncing this correctly? -- Dwolla? And this is an online payment system between people. So, peer-to-peer lending, I guess we call this? What is this?

Manjoo: Well, it's a way to replace cash transactions between people. And it links to your bank account and to people who have the Dwolla app on their phones can transfer money to one another.

Vigeland: So it's like your own Western Union.

Manjoo: Right. It works across different kinds of phones, and the goal I think with all of these companies is to move society to toward this cash-less and really friction-less way of sending money, where you don't kinda think about the money that's being passed. It just sorta happens over the Internet and it can track your purchases more easily, you have data about what you buy and there is kind of insurance for your purchases, where you wouldn't be able to get that with cash.

Vigeland: All right, well the last service that we wanted to talk about is Google Wallet. Tell us about it.

Manjoo: So Google Wallet is a kind of a lot more traditional pay-by-phone service that basically your credit card information is on your phone, and to pay for something, you wave it front of credit card pay terminals. And the other distinction is that it's not in the iPhone, so you know, that's a big part of the smartphone market and your iPhone won't work with Google Wallet.

Vigeland: So what's stopping this from becoming kind of the de facto method of payment? If I could carry around just my phone instead of my wallet and my phone -- that sounds great!

Manjoo: You know, it's hard to see that we'll ever get to a place where we could replace everything in our wallets with our smartphones. I mean, your driver's license, will that be in your smartphone?

Vigeland: That'd be great! "Here officer, here's my phone!"

Manjoo: Yeah, it would be great, but I don't think people see this as a more convenient system. It's not that big of a difference.

Vigeland: And of course, behavioral economists will tell you that it will make it much easier to part us from our money when we're not actually handing over money, because our brains actually take a moment to think about it when we're handing over cash, but they don't when we're using a credit card. And I would imagine that's even magnified if you're just handing over your phone.

Manjoo: Oh yeah. I mean, I definitely felt that when I was using the Card Case app. I mean, if people don't have to think about handing over money or handing over anything...

Vigeland: There's no pain!

Manjoo: Yeah, there's no pain at all.

Vigeland: All right, Farhad, thank you so much. This has been fun.

Manjoo: Great, thanks a lot.

About the author

Tess Vigeland is the host of Marketplace Money, where she takes a deep dive into why we do what we do with our money.
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Thanks for this story, although I couldn't help noticing that you left out my favorite way to pay without digging out your wallet. LevelUp (http://www.thelevelup.com/) isn't available in LA (yet) but folks in Boston, San Francisco, New York and Philly have growing lists of places you can use their service. The best parts? As you spend money with them you get bonus money to spend later, starting with a $5 bonus the first time you use it, plus if you're like me and don't have a smartphone they give you both a QR code you can use and a physical card with your code you can show instead of the phone. Now all I need is some extra funds to use my card for the first time, but that's more about how little money I have than how many stores use LevelUp so far.

Merry Chrismukkuh to you and everyone at Marketplace Money!

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