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Paying by smartphone [Telecom]

No cash, card? No problem Paying by smartphone is an emerging trend

By Michael B. Farrell Globe Staff / November 12, 2011

Is your wallet the next relic of the digital age? Why pay with cash or plastic when you can use a smartphone?

That is what Ainsley Onstott did on a recent afternoon in Cambridge's Kendall Square. She simply showed her iPhone to pay for a sandwich at Sebastians Cafe. "They scan it, and I get my receipt e-mailed to me,'' said Onstott, 26, a special events manager at the American Heart Association.

With about 35 percent of Americans carrying smartphones, the mobile commerce market is spreading fast. Anyone with an iPhone, Android, or BlackBerry can download an app for making purchases. And merchants can plug in credit card readers for on-the-spot sales.

The trend is just emerging, but Boston technology start-ups, banks, credit card companies, telecommunication firms, and retailers are making big investments to make it easier for people to pay by phone. Earlier this week, Apple Inc. became the latest firm to make that happen when it introduced EasyPay, an app that enables Apple Store customers to buy products with an iPhone by using its camera as a bar code scanner.

Mobile payments are just a sliver of retail sales. They accounted for $3 billion in sales in 2010, or 1 percent of e-commerce transactions, but they are expected to double this year and reach $31 billion by

2016, according to Forrester Research of Cambridge.

Onstott, the Sebastians Cafe customer, used an app from LevelUp, a service launched in March by Cambridge social media gaming start-up SCVNGR. Its app gives smartphone users individualized Quick Response codes for merchants to scan.

So far, LevelUp can be used at more than 180 places in the Boston area, from coffee shops to upscale restaurants. At Sebastians in Kendall Square, about 5 percent of customers use LevelUp, or about

600 customers a month.

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Reply to
Monty Solomon
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Is your wallet the next relic of the digital age? Why pay with cash

>or plastic when you can use a smartphone? > >That is what Ainsley Onstott did on a recent afternoon in Cambridge's >Kendall Square. She simply showed her iPhone to pay for a sandwich at >Sebastians Cafe. "They scan it, and I get my receipt e-mailed to >me,'' said Onstott, 26, a special events manager at the American >Heart Association.

For the dubious convenience of paying by smartphone (in lieu of cash) for a sandwich, all you have to do is turn over your mobile phone number, email address, and credit card or bank account info. I can't understand people rushing to give up so much private information for so little benefit.

-Ed

Reply to
bernieS

In addition to the convenience, they're currently offering credits to customers to get them to use it.

Reply to
Barry Margolin

What the cellphone companies are trying to do is bypass the existing credit industry and switch consumers to electronic payments drawn directly from their bank accounts. Mastercard, Visa, American Express, and all the other credit issuers are currently collecting as much as

2.5% of each transaction, and that adds up to billions of dollars per year that Paypal and other EFT facilitators are eager to split with cellular providers.

In addition to the money, there are savings in other areas: EFT has very few of the safeguards and dispute resolution procedures mandated by law for credit-card transactions - AFAIK, you get whatever your bank /chooses/ to give you, and that's all.

The third leg of this Golden Triangle is probably the most troubling: if your cellular provider is now performing clearing-house services on your behalf, whether for EFT *or* for credit-card payments, that means that they also have an accurate record of your buying habits, which the cellular provider can tie to your identity.

With a credit card, the card's issueing bank was the only place that could tie your id to a purchase: after all, the whole process happens "off line" as far as the cellular network is concerned. If cellular-based EFT becomes common, your cellular provider will be able to sell your purchase data to all comers within a few seconds of it being gathered. Information about every hotel where /you/ rent a room, every time /you/ spend a night away from your spouse, every book /you/ buy, and every charity /you/ give to will now be available to anyone with the cash to pay for it.

This is, in other words, the pot 'o gold at the end of the marketeer's rainbow: the ability to market directly to /you/ based on every person /you/ talk to, every purchase /you/ make, and every place /you/ visit. Not only is Big Brother watching you, but he's selling your life story to every moralist, shame-monger, criminal, cretin, and politician who will ante up, and /you/ may expect that they will all be eager to use that information to force you to act the way they want and to do what they want.

Don't say I didn't warn you! :-(

Bill

Reply to
Bill Horne

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