Mobile payment options for your digital wallet

Credit and debit cards have started a revolution. You no longer have to carry a checkbook or go to the appliance store with hundreds of dollars in cash to pay for that new washer. Yet they are not without problems.

We have become so used to giving our card to the waiter in a restaurant and having it brought back. This gives them ample opportunity to take your card on the back and steal your information if they choose. In other situations, machines can be compromised in order to give up your card numbers.

I am convinced that most of the employees are honest. Yet why take the risk?

New chip and pin technology makes things a little better. You need the card and your PIN code to complete a transaction. Things aren’t totally perfect when they can watch you type it, though.

New technology has made it possible to take the credit card out of the transaction altogether by taking advantage of something many of us would never let go of our hands: the modern smartphone.

Besides paying merchants, you can also pay your friends using a variety of services.

A modern store experience

Let’s start with a quick rundown of how it works before we go any further Although there is three major players in the mobile payment space, they all work pretty much the same from a user experience perspective.

Let’s say Joe brings his purchases to the counter. When they’ve been called and it’s time to pay, he pulls out his phone, selects the credit card he wants to use from his virtual wallet, and presses the phone against the terminal to pay, verifying the payment with a code. PIN or fingerprint.

How secure is it?

The short answer is very. Let’s start with the actual transaction mechanisms. In order to communicate between phones and registers, both Apple and Google use Near Field Communication (NFC). With Samsung, it supports both NFC and what’s known as Secure Magnetic Transmission (MST), which allows your phone to send a signal that emulates the passage of a physical credit card so that it is supported by the greatest number of cash registers.

Both technologies require the phone to be within an inch or two of the terminal, which helps prevent accidental transactions.

What does the merchant see at the time of the transaction? Not your credit card number.

In the case of Apple and Samsung, your card number is stored either in a secure location on the phone that is only used for payments, or securely in the cloud on a server where they are processed with providers. of payment. Tokenization creates a unique identifier for each specific transaction so that no one ever sees your card number.

Google’s Android Pay handles things a little differently. Your credit card information is stored in the cloud, but instead of using tokens, you have a virtual card number that the merchant sees. In order to make sure things are secure, Google sends a confirmation to the user that includes the amount you paid as well as the merchant’s name and number.

There is a fourth option that works regardless of which phone you have, but it’s a little less common. Some stores allow you to scan a QR code to use your PayPal account to pay for your purchase. If you use the PayPal service, you can pay in some stores by having them scan a QR code.

The inconvenients

This technology has certain drawbacks, mainly related to compatibility. Apple Pay only works on iPhone 6 and above. Android Pay only works on Android phones with KitKat 4.4 or higher. In addition, the phone must support NFC. Samsung Pay only works with Galaxy Note 5, Galaxy S6 and later.

Each of these is only supported by certain banks, but more are added all the time. Retailers are also slowly rolling out new point-of-sale terminals to take advantage of new technology, but by no means is that everywhere.

Pay your friends

Paying with your phone in a retail store might just be the start, but paying your friends on the go has really taken off. Let’s take a look at some of your options in this area.

Venmo

While the following all do something similar, there is one pretty cool feature that Venmo provides.

The iOS and Android app has a social sharing feature that lets people see who you’ve paid and what the note line was. It’s optional and certainly not for all transactions, but I could see it useful among a group of friends.

I have a long and glorious history of never winning fantastic sports – rather, I’m in it for fun and companionship. Let’s say I want to pay my dues to Sean. My line of note to Sean and the league might say something about sacrifice money. Not only could this be a witty joke site, but it would be a great place to follow those who paid and encourage speed through peer pressure.

Let’s be social

Did you know that you can send money via Facebook and Gmail by clicking on the $ icon in messages? Enter the amount you want to send, and if your friend has a debit card connected to Google Wallet or Facebook, they can receive the money. There are no transaction fees.

PayPal and Square Cash

You can pay someone through PayPal using their cell phone number or email address. If they don’t have an account yet, they can create one to receive the money. It’s free if you link your bank account to PayPal.

Square Cash allows people to send money through their debit card at no cost. Businesses can also open an account and pay a 2.75% fee per transaction.

Bitcoin

An interesting concept, Bitcoin is a fully digital currency. This means that if you convert your money to Bitcoin on one of its digital exchanges, the money can be used across borders no matter what country you are in without any additional conversions.

In practice, this has not been widely accepted by the general public. However, a guest on our recent podcast believes the encryption behind it might play a role in What’s next for FinTech.

What apps and systems do you use for mobile payments? Let us know in the comments.

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About William Moorhead

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