Bet­ting on a wal­let- less fu­ture

Tech com­pa­nies want shop­pers to get used to pay­ing with their watches and phones.

Los Angeles Times - - TECHNOLOGY - By Matt O’Brien O’Brien writes for the San Jose Mer­cury News/ McClatchy.

Some pay for deli sand­wiches with a f lick of their In­ter­net- en­abled wrist­watches. Osama Bedier waves his phone.

The cus­tomers who shop at Mol­lie Stone’s Mar­ket, in Palo Alto’s start- up row in the heart of Sil­i­con Val­ley, are in­creas­ingly buy­ing gro­ceries with­out cash or credit cards.

“I haven’t car­ried around cards for a very long time,” Bedier said. “I try to travel very light.”

These shop­pers are still early adopt­ing out­liers — es­pe­cially Bedier, the ex­ec­u­tive who ran Google Wal­let be­fore start­ing his own com­pany to build mo­bile pay­ment ter­mi­nals — but Ap­ple, Google and Sam­sung are count­ing on them as bell­wethers in a new fight to be­come your insep­a­ra­ble vir­tual wal­let. And de­spite early re­sis­tance from re­tail­ers and even con­sumers, mo­men­tum is now build­ing to­ward mak­ing these tap-and- pay sys­tems a wide­spread con­sumer habit.

Ap­ple ear­lier this month an­nounced en­hance­ments to Ap­ple Pay, which was in­tro­duced in the fall, and Google said it will soon launch An­droid Pay, its Google Wal­let suc­ces­sor. Ama­zon dropped out of the dig­i­tal wal­let race ear­lier this year but could re­turn. Sam­sung is about to en­ter the mar­ket af­ter buy­ing Mas­sachusetts- based LoopPay in Fe­bru­ary.

“What’s be­come the bat­tle­ground for big tech com­pa­nies is rel­e­vance: How do I be­come a cru­cial part of your life ev­ery day?” said Bedier. Mak­ing a pur­chase is “one of the few ne­ces­si­ties you can’t live with­out,” he added.

Qui­etly wav­ing and tap- ping a per­sonal de­vice to buy jeans or a bur­rito could one day be­come as ubiq­ui­tous as the old cash register “chaching,” but tech com­pa­nies must still over­come chal­lenges be­fore they can per­suade con­sumers — and, just as im­por­tant, the stores that sell to them — to phase out mag­netic stripe cards in fa­vor of “near- f ield com­mu­ni­ca­tion,” or NFC.

“I’ve been pay­ing for a while with my phone,” said Google Chief Ex­ec­u­tive Larry Page, speak­ing at the com­pany’s re­cent an­nual share­holder meet­ing. “First time you pay with a phone, and you don’t have to pull out your card, mess with en­ter­ing codes and sign­ing things and so on, it’s a pretty great ex­pe­ri­ence.”

Out­side the gad­get- lov­ing world of Sil­i­con Val­ley, how­ever, not that many Amer­i­cans are yearn­ing for that ex­pe­ri­ence. Seventy- five per­cent of U. S. con­sumers who don’t use smart­phones to make pur­chases have no de­sire to change that prac­tice, be­liev­ing it’s eas­ier to pay with cash or credit and debit cards, ac­cord­ing to a March sur­vey by the U. S. Fed­eral Re­serve.

“Peo­ple still don’t see why they should bother with mo­bile pay­ments when a lit­tle plas­tic credit card is just as easy,” said Matt Schulz of Cred­itCards. com. “It’s un­der­stand­able that peo­ple are a lit­tle re­luc­tant be­cause it rep­re­sents a ma­jor change to some­thing we’ve been us­ing in pretty much the same way for decades.”

But the mo­men­tum is mov­ing to­ward wider adop­tion.

The big­gest pro­pel­ler of change could be an Oc­to­ber dead­line set by the U. S. credit card com­pa­nies Visa, MasterCard, Dis­cover and Amer­i­can Ex­press. In a joint move to re­duce credit card fraud, the com­pa­nies want re­tail­ers to switch over to en­abling “chip- and- PIN” pay­ments, ac­cept­ing cards that rely on in­te­grated cir­cuits and per­sonal iden­ti­fi­ca­tion num­bers rather than mag­netic stripes and hand-signed re­ceipts.

Though “chip- and- PIN” is dif­fer­ent from the ra­dio com­mu­ni­ca­tion tech­nol­ogy adopted by Ap­ple and Google, re­tail­ers who need to over­haul their store ter­mi­nals are likely to in­clude both sys­tems. And an en­tire in­dus­try of dig­i­tal pay­ment in­no­va­tors — from PayPal and San Jose stan­dard­bearer Ver­iFone to start- ups such as Square and Bedier’s Poynt — are work­ing on get­ting bet­ter ter­mi­nals in time.

All of this is mov­ing to­ward a shop­ping ex­pe­ri­ence that could give Sil­i­con Val­ley com­pa­nies far more in­for­ma­tion than they al- ready have about con­sumer buy­ing habits, pair­ing data col­lected online with re­al­world trans­ac­tions that could be valu­able to ad­ver­tis­ers.

Ap­ple is also col­lect­ing from banks 15 cents from each $ 100 pur­chase, but Google will not earn fees, ac­cord­ing to news re­ports.

At the Mol­lie Stone’s in Palo Alto, what be­gan as a hand­ful of cus­tomers six months ago has trans­formed into “40 or 50 a day” who pay with smart­phones or watches, said store man­ager John Gar­cia. He jokes that many of his cus­tomers also wore Google Glass in the store be­fore that ex­per­i­men­tal eyewear “went out of style,” but this new trend ap­pears to be more than a gim­mick.

Jason DeCrow

A GUEST makes a pur­chase at the Dis­ney Store in Times Square us­ing Ap­ple Pay, which was in­tro­duced in the fall. Mo­men­tum is build­ing to­ward mak­ing tap- and- pay sys­tems a wide­spread con­sumer habit.

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