Last week I was eating lunch at Noodles when I went to pay using my phone. As I tapped the retail payment terminal lightly with my Samsung Note 5, the guy behind the register grinned. "You seem like a tech savvy guy. Do you want to join our rewards program?" He proceeded to hand me a cardboard card with instructions on how to download their app, which of course would reward me for buying their products.
The guy behind the counter seemed surprised that I used my phone to pay. That got me looking into the statistics to see just how much mobile wallets are being used in the United States. Here is what I found. As of June 2017, the following percentages of people surveyed responded that they have used the following payment systems.
- 24% of Apple users surveyed had used Apple Pay
- 10.6% of Android users surveyed had used Android Pay.
- 14.5% of Samsung users surveyed had used Samsung Pay.
Not a high usage rate to be sure. The reasons people gave for not using their mobile wallet varied. Most were satisfied with their current method of payment (plastic credit cards). I wonder if they know that the fancy chips that were just put on our cards, and that are supposed to be so secure have been in use in Europe for nearly a decade. When it comes to adopting new financial technologies, the United States is woefully behind the rest of the world.
Don't be like the rest of the folks in the US. Take the first step and join the 21st century banking world. If you haven't done it already, download your Apple Pay, Android Pay, or Samsung Pay app and get started.
How it works:
These simple payment apps merely mimic a credit card payment. They use a Near Field Communication (NFC) low speed and very low range (approx 4 centimeters) radio frequency to communicate protocol to make the transaction. Whenever you make a purchase, a "token" is created. This token is a 16 digit number that replaces your real credit card number. That way, if there was ever a breach and your transaction information was exposed, your real account number is protected. To set them up:
- Download your app.
- Open the app. From here they generally work the same.
- The app takes a picture of your credit card and reads the number, (or you can input it manually).
- Then enter the expiration date and CVC.
- Repeat steps 3 and 4 for all cards you want to load.
You can set a default card to use when you open the app to pay. Other cards are available by just scrolling through them and touching the one you want. Along with credit cards, many loyalty cards can be added. I have my Hy-Vee Fuel Saver and O'Reilly Auto Parts rewards cards on the app. It's great to have them without needing a three inch thick wallet in my back pocket!
To pay, you just open your phone using your PIN or fingerprint. Open the app, and tap the retail terminal when your final bill is displayed on the terminal. For an added measure of security, I have NFC turned off, so it takes me 3 seconds to turn it on when I use my Android Pay. It really is pretty convenient.
What It Does and Doesn't Do
These payment systems are really just a gateway training app for the future of FinTech and nothing more. While it can feel cool tapping your phone to the terminal and hearing a nice "ding", in reality it isn't doing anything new. You still pay using US dollars. The merchant still gets charged the 2 or 3% fee for using my credit card. It still uses the same banking system.
What it does however, is get you past the weird factor in using your phone to pay for something. Because someday you just might find yourself paying with a local currency that automatically puts that 2% fee into a local non-profit to be used to improve the local community, instead of sending it to Wall Street. Imagine paying with your currency of choice - one that promotes your values and funds initiatives you care about. It doesn't enslave people in perpetual debt. It doesn't make Wall Street rich. It doesn't ship money out of your local community. Nice.
This is the future of money we are working toward. The technology is there to make it happen, albeit it's still a bit fragmented. But those fragments are coming together. So, my encouragement to you is to take this first step if you haven't already. Get past the mental block of using your phone to pay for goods and services. You'll be on your way to becoming FinTech savvy, ready to embrace a monetary eco-system that serves the people of the world, rather than the elite. That's a world we can all look forward to.