I was one of the first kids on my block to have a Citicard AAdvantage PayPass key fob. I was also one of the first to put a Citicard AAdvantage PayPass sticker on the back of my cell phone. I use it in taxi cabs, Duane Reade (Drug Store), D’Agostinos (Super Market), and all kinds of other stores, shops, fast food restaurants, etc. It works great!
How much faster is it to tap the back of your phone to the PayPass terminal then it is to take out your wallet, get your credit card, swipe it and put the card back in the wallet and put it back in your pocket? Well, it takes me about 13-15 seconds to use a credit card as described above and it takes about 1/2 second to accomplish the same thing with the PayPass sticker on the back of my phone. Simply put, PayPass is an exponential time saver. I take an average of four taxi rides each business day. So, I’m saving a minute a day, five minutes a week or, to put it in proper perspective: about four hours a year. Using PayPass saves me half a business day a year just on time spent in cabs. When you add in all of the other time savings, it’s the best “cash back” card available.
As expected, Google has announced a deal with MasterCard, Citibank and PayPass to use the NFC (Near Field Communications) chip in its Google Nexus S Android smartphone, to transact business. Google calls it, “Google Wallet.”
I don’t know if this is the combination of organizations and technology that will capture the hearts and minds of consumers, but let’s spend a minute examining the potential of this technology.
My PayPass sticker is a one-way device. After I approve the purchase price, I place my PayPass sticker on the PayPass pad until I hear a beep. Then I see a dialog box or message that tells me that the transaction has been approved (or declined). It is up to me to go home and reconcile my paper receipts (if I have them) with my credit card statement and make sure that all of my transactions are correct.
With Google Wallet (or any phone with an NFC/PayPass enabled chip), I should be able to run software that directly ties my purchases to my account balance at point of sale and I should have instant access to the data I need on my end of the transaction.
Unlike the sticker, an NFC chip inside my phone is totally secure. If I lose my phone now, the sticker is a valid credit card. It’s like losing your wallet, whoever finds it can just use your credit card until you cancel it. However, my phone has a password and it is required for the NFC technology to work. This is awesome!
A virtual wallet in my phone means that I can allow my favorite vendors and retailers to offer me discounts based upon my purchases right at the point of sale. It’s good for them and good for me. And, most importantly, a virtual wallet will allow me to carry less cash – a lot less.
What’s the down side? There are quite a few: many people will not trust the technology so consumer adoption may be slow. Every transaction you do with a phone will be documented by physical location of the device, the payment terminal and your bank. There will be no level of anonymity with a virtual wallet purchase. And, maybe most importantly, the easier it is to make a credit card purchase, the more likely you are to purchase stuff you can’t afford or shouldn’t buy. That said, I think the benefits outweigh the risks and tradeoffs.
I am very excited about Google Wallet. I don’t plan to buy a Nexus S, nor will I apply for an additional MasterCard from Citibank – but I will jump at the first chance to activate this system when it becomes available on a future phone purchase. I know first hand how beneficial a PayPass sticker is to me. I also know that I would much rather have the technology integrated into my mobile devices. 