ALTO, Calif. ó Some pay for deli sandwiches with a
flick of their Internet-enabled wristwatches. Osama
Bedier waves his phone.
customers who shop at Mollie Stoneís Market, at the
heart of this Silicon Valley cityís startup row, are
increasingly buying groceries without cash or credit
havenít carried around cards for a very long
time," Bedier said. "I try to travel very
shoppers are still early adopting outliers ó
especially Bedier, the executive who ran Google Wallet
before starting his own company to build mobile payment
terminals ó 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.
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.
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 canít live
without," he added.
waving and tapping a personal device to buy jeans or a
burrito could one day become as ubiquitous as the old
cash register "cha-ching," but tech companies
must still overcome challenges before they can persuade
consumers ó and, just as importantly, the stores that
sell to them ó to phase out magnetic stripe cards in
favor of "near-field communication," or NFC.
been paying for a while with my phone," said Google
CEO Larry Page, speaking at the companyís recent
annual shareholder meeting. "First time you pay
with a phone, and you donít have to pull out your
card, mess with entering codes and signing things and so
on, itís a pretty great experience."
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 donít use
smartphones to make purchases have no desire to change
that practice, believing itís easier to pay with cash
or credit and debit cards, according to a March survey
by the U.S. Federal Reserve.
still donít see why they should bother with mobile
payments when a little plastic credit card is just as
easy," said Matt Schulz of CreditCards.com.
"Itís understandable that people are a little
reluctant because it represents a major change to
something weíve been using in pretty much the same way
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.
"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 ó from PayPal and San
Jose standard-bearer VeriFone to startups such as Square
and Bedierís Poynt ó are working on getting better
terminals in time.
of this is moving toward a shopping experience that
could give Silicon Valley companies far more information
than they already have about consumer buying habits,
pairing data collected online with real-world
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.
STORY CAN END HERE)
the move to the tap-and-pay models touted by Apple and
Google are some of Americaís biggest retailers,
worried about ceding to tech companies the consumer
profiles that advertisers covet. A consortium called the
Merchant Customer Exchange, or MCX, which counts
Wal-Mart, Target, Kmart, CVS and other well-known brands
as members, is working on its own app, CurrentC, that
would allow smartphone users to scan a QR code to buy a
the resistance is showing signs of fraying.
Wallet, introduced in 2011, never really took off
because it arrived on the scene too early and "didnít
have the carrier relationships to help put the
technology and software in every phone," Bedier
said. But today, Apple Pay and Googleís Android Pay
have partnerships not just with major wireless carriers
and credit card companies but with a growing number of
merchants, from Whole Foods to McDonaldís. Best Buy, a
member of MCX, recently broke away to partner with
Google and Apple and accept their payments.
think MCX has been doomed to fail from the
beginning," said Dana Stalder, a former PayPal
executive and partner at venture capital firm Matrix
Partners. "I donít think they have the
wherewithal to offset the momentum."
like the rise of e-commerce purchases on desktop
computers, Stalder said the use of mobile payments will
eventually hit a tipping point of merchant and consumer
acceptance. Tokenization ó which protects a personís
credit information from breaches by giving a unique code
to each transaction ó and fingerprint scanning will be
built into the smartphone payment systems, reducing
fears about security.
the convenience is hard to match, he said. Stalder
recently paid for a dinner at chain restaurant Paul
Martinís using his phone and the same platform,
OpenTable, he used to make the reservation.
even talked to the waiter," Stalder said. "He
knew we had paid, and came over and said, ĎThanks for
coming.í That was it."
the Mollie Stoneís 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