A crucial question is what information the wallet issuer will be able to see about a consumer’s transactions. There’s valuable information there that could be used to target marketing offers or for loyalty programs. MasterCard is still working out those details, Olebe said.
“There’s a myriad of laws and rules we have to apply,” he said. “We don’t want to push the envelope on that.”
There’s no guarantee that MasterCard’s wallets will work on phones for tap-to-pay transactions at the register, either. MasterCard is taking a “wait and see” approach to that, Olebe said.
MasterCard competitor Visa is more bullish about tap-to-pay phones. It has an online wallet like MasterCard, but also a wallet application designed to work on smartphones with built-in Near-Field Communications, which enables tap-to-pay transactions. But so far, the few smartphones in U.S. stores that have NFC chips work only with Google’s Wallet. What’s holding Visa and others back, said John Partridge, the president of Visa, is that the U.S. phone companies have to allow the banks to load cards for use on phones.
Naturally, the phone companies have their own ideas about how digital payments will look in the future. Sprint Nextel Corp. is collaborating with Google and its Wallet, while the rest of the Big 4 national wireless carriers, Verizon Wireless, AT&T and T-Mobile USA, have formed a consortium to create their own wallet.
The phone companies are “earnestly trying to adapt to the new ecosystem,” said Bill Greenwell, the CEO of BilltoMobile. “But there’s certainly friction on the legal side and the business side.”
Visa is getting a break at the Summer Olympics in London, where athletes and VIPs will be using the NFC-equipped Samsung Galaxy S III phones with prepaid Visa cards already loaded to make payments.
While paying for things with phones is still in its infancy, accepting payments with phones is already easy.
VeriFone Systems Inc., the largest maker of credit-card terminals in the U.S., announced “Sail” at the show.
It’s a thumbs-sized card reader that plugs into a smartphone, letting anyone who sets up an account accept credit-card payments. It’s VeriFone’s answer to similar products from financial software-maker Intuit Inc. and startup Square, already in use in New Orleans taxi cabs.
Much like its competitors, VeriFone will send the card readers out for free by mail to anyone who signs up, and will charge 2.7 percent of the amount of any transaction, or less if the user pays monthly fees.
VeriFone’s unique advantage is that its phone-based card readers can be combined with more full-featured smartphone jackets that accept chip-based cards, or full-blown payment terminals, said Dave Talach, VeriFone’s vice president of strategic development.
VeriFone’s latest terminals are by default capable of accept tap-to-pay transactions, unlike the previous generation. But it will take time for these terminals to replace the old ones. Stores switch them out after three to five years, Talach estimates. That’s down from a five-to-seven year cycle earlier, but ponderous compared to the pace of the cellphone world, where a phone is outdated after a year.<< previous 1 2