Why can’t you pay for more things with a wave of your mobile phone?
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The big telecom show Mobile World Congress kicks off in Barcelona this week. Expect a lot of talk about phones and the things you can do with them.
After reports last week that Apple and Goldman Sachs might launch a credit card potentially tied to the iPhone’s digital wallet, there will probably be plenty of talk about mobile payments.
We’ve asked both Apple and Goldman Sachs for more details on what the supposed Apple credit card might be — whether it’s a physical card or only attached to the Apple Pay digital wallet. They didn’t get back to us to clarify.
But weren’t we supposed to be paying for everything with our phones by now, anyway?
Host Molly Wood talked with Lisa Ellis, who covers payment services at the research firm MoffettNathanson. She said when we moved to chip-based credit cards a few years back, we kind of missed the mobile boat. The following is an edited transcript of their conversation.
Lisa Ellis: It was expected that merchants and banks would roll out the contactless method of payment at the same time. That technology has been around for many years, but it was expensive. As a result, they didn’t do it then. We’re still sitting in this world where we insert the card with the chip at the point of sale. We’re still a little bit stuck.
Molly Wood: It sounds like consumers are also not dying for this, partly because they don’t know what is possible. I’m dying for it. I want to pay with my phone.
Ellis: That’s true. I think the sense of urgency is definitely starting to build, but certainly as of two or three years ago, it was not there. The reality is, pulling your card out and using your card at the point of sale is just not that hard. Because that infrastructure is so ubiquitous and so durable, many consumers aren’t bothered.
Wood: Is there some big benefit that we’re missing out on by not making this move?
Ellis: I think a big promise of moving to mobile payments is not so much just about the payment, it’s actually having the payment embedded in the app. This is along the lines of what Apple is rolling out with their new cards in their digital wallet. The company is able to monitor and track and help you with your financial health through an app at the same time, and in real time, while you’re making payments. Or the company can extend you credit or offer you a promotion in real time while you’re making a payment. That’s what we’re really missing out on when we’re using a physical card. A physical card can’t do any of that. There’s no app around it. But when you have an app, all of a sudden the world is just wide open to offer some of these other things, to extend credit, to offer loyalty and promotional programs, to help you with your financial health. This is like Siri, leaning over your shoulder, telling you, “Are you sure you want to buy those shoes? You’re already over your budget for the month.” That’s the promise of mobile payments, more than just the seamless payment itself. It’s what else you can do in and around that payment when it’s embedded in an app and connected to your phone.
Related links: more insight from Molly Wood
Mobile payments are still messy and difficult. One Mobile World Congress preview suggested that cryptocurrency payments will once again be part of the conversation. Even so, that wouldn’t make things less messy.
Jessica Dolcourt has a piece on CNET about leaving her wallet at home and having to survive a day with just her phone to pay for things. It’s a slightly depressing look at how hard it would be to try to live wallet-free here in the United States, even in tech-forward San Francisco. There were some stressful moments. Perhaps the biggest issue with not having a physical card is that if your phone battery dies or you end up somewhere without service, you can’t pay for anything.
Between the battery life and Siri snooping on me all the time, maybe I don’t want mobile payments so much after all.
On the topic of telecom and privacy, there’s a Senate Commerce Committee hearing Wednesday on privacy and data protections. Interestingly, only members of the telecom industry will be speaking at the hearing. Privacy advocates and consumer groups are not on the witness list.
Also, according to Politico and The Hill, Sen. Roger Wicker, R-Miss., chairman of the Senate Commerce Committee, will attend a fundraiser hosted by lobbyists for AT&T and USTelecom the night before the hearing.
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