Editorial Policy

Don’t leave your wallet home just yet — mobile payments have a ways to go

Kristin McGrath

April 5, 2013

“Ma’am, I don’t know what that is, and nobody has asked me that question before,” the cashier at my favorite local sandwich shop told me. “We take cash or card.”

That was the response I got after asking if I could pay for my sandwich using Square Wallet, a mobile payment app. The deli was on my app’s list of local merchants accepting Square Wallet and, the moment I parked my car, I got an alert welcoming me to the establishment and welcoming me to use the app (I’d configured the app to engage automatically when I was near the restaurant). And yet, when I tried to pay, it was a no-go.

Mobile payments, which  allow you to sync a payment card to the app and pay with your smartphone, have been one of the most buzzed-about developments in the payments industry the past couple years. The big contenders (Square, PayPal, Isis and Google Wallet) may differ slightly, but their advertised message is the same: Leave your wallet at home.

The apps have a lot of ground to cover to make that a reality, however. For one thing, it remains to be seen whether consumers are willing to turn their phones into wallets. A March 2013 Federal Reserve survey found that while half of smartphone users had used their phones for mobile banking in the past 12 months, just 6 percent had used their phones to make a point-of-sale payment. Overall, less than a fourth of consumers (22 percent) said they’d be interested in giving mobile payments a try, and 36 percent said they found it more convenient to pay via other methods, such as cash and plastic.

Then there’s the question of whether enough businesses will allow customers to use their phones as a payment method. If early adopters are getting rebuffed by cashiers, the technology could stall. To find out how easy it would be to use mobile payments in the wild, I took the technology for a spin this week. Because I’m an iPhone user, Google Wallet and the heavily-advertised Isis were out (they require near field communication, a wireless technology enabled only on select Android devices). That left me with PayPal and Square.

Late last year, PayPal partnered with software company ERPLY to let PayPal users use their phones to pay at the register with funds in their PayPal accounts. Customers use their phones to check in when they enter a business that uses the technology. Their profile and photo pop up on the cash register’s screen, and customers simply say their name at checkout to complete the transaction, no swiping necessary.

I already have a PayPal account — and a balance of $25 in it — so I was eager to use the app. But I hit a dead end almost immediately. There are only a few businesses (a salon, a rug store and a nutrition store) near me that use the service — and none sold things I wanted to buy.

Square Wallet
Square Wallet also uses the check-in concept — when you enter a store, you can open a tab and give your name at the register to check out. You can also use the more streamlined “hands free” option to enable certain businesses to open your tab automatically when you’re within 100 meters. That lets you walk in, order and pay with your name without digging for your phone or pressing buttons.

The first place I tried was the deli where I confused the poor cashier. I called the next day and spoke with a manager about my experience, and she explained that the restaurant had taken the initial steps to use Square (which is why my app was picking it up), but hadn’t integrated it with their payments system.

“Not many people ask us to use it,” she told me. “We’re hoping to have everything hooked up in the future.”

My second stop was Starbucks, which struck a highly publicized deal with Square last summer. Starbucks isn’t using the hands-free checkout system yet. You have to pull up the app on your phone, push the “pay here” button and show the resulting QR code to the cashier for scanning. Given the publicity surrounding Square’s partnership with Starbucks,  I figured the process would be smooth. What actually happened was this:

Me: Hi, can I pay with Square here?

Barista: Wait, pay with what?

He called a coworker over.

“She’s got this app on her phone called ‘Squared,’ ” he explained. “Do we do that?”

“I don’t know,” said the coworker. “But we can try.”

We all huddled around my phone. I generated the QR code. The barista picked up a scanner from beside the register and took aim.

“Hey, it worked!” he said. “That’s pretty cool. You said it was called Square?”

I still wanted to find a place that let me use the hands-free feature, so I headed over to a local ice cream shop that popped up in Square’s locator. It was here that I got the authentic Square experience.

“Hi,” I said as I walked in. “Can I use Square here?”

“Are you Kristin?” the cashier asked, turning the iPad they were using as a register toward me. There was my picture.

I asked if many customers are using Square. The cashier told me it happens every once in a while, but not often.

“It’s weird though,” she admitted. “It picks up on your phone when it’s nearby, so when people who have the app are at the bar next door, their faces pop up on our screen. It’s funny how you know they’re nearby and know their names.”

My verdict
When mobile payments work the way they’re supposed to, they’re convenient and fun. However, I’m not totally sold on the hands-free automatic check-ins. What’s to prevent a cashier from putting someone else’s order under my tab if I happen to be next door? Square’s chief operating officer addressed that concern in this New York Times blog and pointed that the same thing can happen if you have an open bar tab and the bartender charges the wrong card. Still, I think I’ll disable the hands-free option and check in manually at each business in the future, instead of letting the app automatically open a tab in my name when I’m close by.

My other concern about mobile payments: They may be a little too quick and painless. Studies show that paying with cash helps you make more judicious decisions when shopping. If you’ve ever been shocked at the total on your bar tab at the end of the night, you know how easy it is to spend more if you don’t have to reach for your wallet for every purchase.

For now, though, I’m keeping my debit card synced with Square. I like to leave my wallet at home when I go jogging, and I’d like the option of grabbing an ice cream.

Here are some useful blogs and articles about mobile payments — and the experiences of others who have put them to the test:

Fast Company tried out Square at various Starbucks and confused a slew of employees.

Defend your Dollars has some advice for protecting your personal information while using mobile payments.

The Big Ideas Blog breaks down the technologies behind different mobile payment platforms.

The Lookout Blog lists some mobile payment app safety tips.

Gadchick gave Isis a try and had mixed success.