As news breaks this morning about the Intuit/Mophie partnership that aims to bring a complete credit card solution to the iPhone, the focus has been how this new product – an attachment that snaps onto the bottom of the phone – competes directly with the startup Square, co-founded by Twitter’s Jack Dorsey.
Like Square, the new solution allows you to physically swipe credit cards while processing the transaction over an Internet-connected iPhone. But isn’t toting around a physical plastic card soon going to be a thing of the past? Maybe, as makers of other new mobile payment solutions, including “contactless” technology and money-transfer apps, would have you believe. Then again, maybe not.
The latest news, detailed here on Wired, about the Intuit/Mophie accessory dubbed the “Complete Credit Card Solution” (creative name, yes?), involves a three-component approach. There’s the physical iPhone attachment, built by Mophie, which specializes in things like battery extenders and chargers, the mobile payment application and a merchant account. It’s also contract-free, a rarity among merchant service providers.
The Intuit solution offers a flat rate of $12.95 a month, plus 1.7-3.7% of each transaction and an additional $.30-$.40 per transaction fee. Square, on the other hand, will charge 2.75% plus a $.15-per-transaction fee. Intuit’s biggest selling point, however, is its lack of long-term contracts.
NFC: Now Available, via a Sticker
Although what Intuit is offering is a brand-name and accessible solution for many small business owners, it may or may not be the next big revolution in mobile payment technology. At least, that’s what another startup called Bling Nation hopes.
This company has partnered with another big name: PayPal, to push its “Bling Tag,” an NFC-enabled sticker that can be stuck to the back of any mobile phone. (NFC, or “near field communication,” is a short-range high frequency wireless communication technology which enables the exchange of data between devices over about a 4-inch distance.) In this case, the Bling Tag replaces a credit card, and to use it, you only have to tap your phone onto the merchant’s “Blinger.” The name sounds a little hokey to us, but the idea is solid.
The Blinger is provided to companies for free upon sign up, and set up is simple: You just plug it into an electrical outlet. Also, no integration with a POS system is required.
Processing costs vary depending on the volume of business a company does, but Bling Nation claims merchants could save up to 50% in processing fees, as compared with the large payment processors. Payments are tied to your account at a financial institution, and now, optionally at PayPal. The money is instantly debited from the associated account at the time of purchase.
Unfortunately, the Bling Tags are only available from financial institutions, which have to first sign up to support this technology. That alone will limit adoption, as will the fact that few merchants actually support the thing.
Other NFC News: Apple’s Plans and Visa’s Case
That may change in time, however, especially if Apple builds NFC tech into its next iPhone, as a new hire by the company – Benjamin Vigier, an expert in the field – seems to suggest.
Plus, the startup Bling Nation is only one example of companies looking towards an NFC-enabled future. This summer, Visa is beginning trials of its contactless payment technology, payWave, integrated into a special protective iPhone case, developed in partnership with DeviceFidelity. Using NFC on the back-end, consumers could simply wave their iPhone in front of a terminal. For what it’s worth, the system is already catching on in Canada.
(For more on NFC, see: “NFC: Never Mind Credit Cards, Pay With Your Phone“)
Mobile Payment Services, Apps
Then again, it’s possible that neither NFC nor hardware attachments represent the future of mobile payments: it could be, simply, an app.
Last fall, we looked at several m-Commerce solutions, including Boku, Zong, Obopay, MasterCard’s MoneySend and Nokia Money, to name a few. They aren’t household names, at least here in the U.S., for several reasons, including limited availability, issues with usability and small user bases.
Even though big names like Amazon and Google are jumping into the mobile payments game, as well, (the former with a service for in-app and mobile website purchases and the latter with an even geekier solution – a combination of a browser extension and QR code) the technology hasn’t yet truly caught on for brick-and-mortar merchant-to-consumer transactions.
Consumer Reports Warns of Mobile Payment Issues
Meanwhile, the respected organization Consumer Reports – the same group whose decision to “not recommend” the iPhone 4 due to antenna issues forced Apple to finally fess up and offer free bumpers – has recently warned consumers of mobile payment dangers.
With what seems to be a dire warning, Consumer Reports issued a press release: “Mobile Payment Systems Could Leave Consumers at Risk.” At the crux of the problem with these new technologies, the report claims, are the varying protections for bank errors and unauthorized use. Debit cards only provide protections for bank errors and unauthorized use, not disputes with the merchant. The same goes for transactions where money is automatically deducted from a bank account. And payment services provided by mobile carriers might escape consumer protections entirely, unless a contract specifically provides them.
“Consumers should not be expected to figure out what protections apply to each competing new payments venture,” said Michelle Jun, staff attorney for Consumers Union, the nonprofit publisher of Consumer Reports. “Now that mobile payment ventures are emerging in the U.S., it’s time to harmonize and extend consumer protections for all payment services.”
Ironically, this news release’s intention is actually to push mobile payment companies to get up to speed with their credit card-swiping counterparts. (Consumers Union called on them to include “full consumer rights provided under existing federal law for both debit and credit cards,” it reads. And to provide “true voluntary ‘zero liability’ assurance for consumers without loopholes.”)
But sadly, in an age of headline-only journalism, the news will likely be taken in a more negative light. (As it will by those who have only skimmed this article, reading the section titles, sigh).
Who Will Win?
NFC has seen some success in parts of Europe and Asia, and mobile payments are par for the course in many parts of Africa, where access to banks is limited. But at the end of the day, it’s too soon to know how well (or if) these technologies will take off in this part of the world, namely North America, and specifically, the U.S.
One disadvantage many startups have entering this space is brand-name recognition, or rather, the lack thereof. In Intuit’s trials, for example, many customers trusted the product because they had heard of the company before. Faced with “Bling” stickers and apps that sound like games (“Boku,” “Zong”), there may be adoption issues until there’s a brand-name partnership underway.