By Robin Sidel
Shoppers have a lot more decisions to make if they want to pay
with a phone in the checkout line.
More banks and merchants are developing mobile-payment products
for use in stores, joining the likes of Apple Inc. that have
dominated the nascent business. The result is a dizzying range of
options for shoppers who must decide which method to use if they
want to pay with their phones instead of using traditional plastic
cards.
What is unclear is whether more choice will make people more
eager to embrace smartphone payments or hold back the emerging
technology.
Payment choices range from Wells Fargo & Co., which recently
introduced its mobile-payment application, to Cheesecake Factory
Inc., which lets diners pay with their phone at the table with an
app called CakePay. Wal-Mart Stores Inc. in late June expanded the
rollout of its new payment mechanism that is contained within its
shopping app.
MasterCard Inc. joined the trend on Thursday, announcing that it
is expanding its MasterPass digital-payment platform to let
shoppers use the service on their mobile phones at store checkout
terminals. MasterCard said a number of lenders are signing up to
offer the MasterPass wallet to their customers, including Fifth
Third Bancorp, SunTrust Banks Inc. and KeyCorp.
And J.P. Morgan Chase & Co. executives have said that bank
will unveil its mobile-payment product in coming months.
"It's an opportunity to take what had been a flat transaction
and turn it into a rich and complete mobile experience that has
value in it," said Tom Poole, managing vice president of digital
payments at Capital One Financial Corp., which introduced its
mobile-payment application last fall.
It is also one that risks befuddling consumers rather than
engendering loyalty. That prospect has even caused some to shy away
from creating their own products.
Bank of America Corp., for one, is unconvinced that bank-made
payment applications are worthwhile. It doesn't plan to develop its
own product, instead preferring to support those already offered by
nonbank providers.
"The road to mobile wallets is fairly littered with a variety of
wallets that have proven an inability to demonstrate any meaningful
value proposition for a customer," said David Godsman, head of
emerging payments and commerce at Bank of America.
Even as the range of mobile payment methods expands, adoption
remains below some industry expectations. A survey released by the
Federal Reserve in March found that 28% of smartphone users
interviewed in November had made a mobile payment in the prior 12
months. Of them, 33% had used their phones to pay in a store.
For some banks, developing their own payment apps is a way to
keep a firmer grip on customers who may already be using the bank's
mobile features to do things like check a balance. The banks also
let customers load their cards into nonbank applications from
providers like Samsung Electronics Co., Apple and Google Inc.
"We're not going to pressure people to use the Wells Fargo
wallet over Android Pay or Samsung," said Jim Smith, head of
virtual channels at the San Francisco-based bank. He added, though,
that Wells Fargo customers who use the bank's payment app can do
things like quickly check their balance before making a
purchase.
A recent survey from consulting firm Phoenix Marketing
International found that about 84% of credit-card holders were
aware of the ability to use a smartphone as a replacement for a
plastic card, with 71% of them being aware of Apple Pay. Nearly
one-quarter of all the credit-card holders had linked a credit or
debit card to payment applications from Apple, Samsung or
Google.
Fewer customers were aware of similar products from Capital One
or Chase, according to the survey.
The assorted payment methods rely on different technologies at
the point of purchase that require consumers to handle the payments
differently. The most common method -- used by Android, Apple,
Capital One and Wells Fargo -- uses a technology called near-field
communication in which shoppers make payments by holding the device
up to a reader on the payment terminal.
Shoppers who use the mobile-payment applications from Wal-Mart
and Chase must scan a bar code contained in the app at the payment
terminal.
Cheesecake Factory's CakePay app generates a four-digit code for
the diner, who then gives it to the server. The ordered menu items
appear on the app, and diners can choose to pay the entire bill on
the phone or split it with other diners.
"We wanted to give our guests the ease and convenience of being
able to pay when they want to pay," said David Gordon, president of
the restaurant chain that rolled out the payment system nationally
within the past month.
Banks are also trying to create ways to make their products more
appealing to customers by adding features. Capital One, for
example, has an option called "second look" that alerts customers
if a tip that is input as part of a payment is unusually large -- a
sign that there could be a simple math error or that their bank
account could have been hacked.
Banks are also testing ways to encourage customers to use their
phones by adding loyalty programs and discounts.
But there are limitations in the bank-payment methods. For one
thing, the bank payment apps only allow customers to load in cards
from that institution. That means if a customer has a debit card
from one bank and a credit card from another, they may need two
separate wallets from the two institutions.
That restriction is likely to keep Matthew Byers using ApplePay,
which allows multiple cards, rather than switching to a bank
mobile-payment app. The software developer in Branson, Mo., has
cards from American Express Co., Discover Financial Services and
Barclaycard. But, said Mr. Byers, "I just want one place to go and
am not going to go into each individual app."
Chase Pay
based on QR codes, to launch in coming months
Capital One
Has features like "second look" that warns about an extra-big
tip
Apple Pay
more than 1,300 lenders let customers load their debit and
credit cards onto the platform
Android Pay
accepted at over one million stores
Wells Fargo Wallet
announced in May, launching this summer
Walmart Pay
works with retailer's shopping app
Samsung Pay
can be used at swipe-only terminals, as well as newer
versions
Masterpass
can now be used for
in-store phone payments
CakePay
lets diners pay on phones without waiting for server to deliver
a bill.
(END) Dow Jones Newswires
July 14, 2016 15:00 ET (19:00 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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