In a world in which technology changes so quickly, the next step we will be facing is how to use our phones to charge purchases. Instead of a wallet full of credit cards, imagine if you had the ability to make a credit card purchase straight from your phone. The technology, known as mobile wallet, is being used overseas and may be heading our way. But here in the U.S. we have the technology in place, but once again it is greed that is keeping us from using it.
Every company that will be involved in implementing a mobile wallet wants to know how big their cut of the pie will be. Besides the banks and credit cards companies, companies like Apple and Google want their cut as well. While Mastercard and Visa have been the controlling force behind credit cards for decades, there are new players like PayPal and Google Checkout that also want to get in on the action.
We also have the retailers who will need to upgrade their current systems and have new terminals installed. The retailers will need to have both systems: one for credit cards and one for mobile wallet transactions. In addition, the cell phone merchants are looking to cash in on using their phones to complete a transaction.
Today a credit card transaction for every $1 spent usually allows the retailer to keep 97 cents. The fees are split with 2 cents going to the card issuing bank or other credit card issuer and 1 cent being paid to the merchant’s bank that handles the actual transaction and payment back to the merchant. The current system provides bank profits in the billions of dollars and the banks do not want to see those profits evaporate.
On the flip side we have consumer groups who think that the use of a mobile wallet to make purchases could allow the banks to increase their transaction fees. There are others who worry that consumers may make purchases without the full knowledge of what they are actually being charged. This is just a buyer beware issue that we already address when we use a credit card in a brick and mortar store or online.
I believe that I would use my phone to make a purchase if it were linked to an account with a low charge limit. I use a credit card online that has a low limit just in case the card number is stolen. I would do the same on my phone.
What about you? Would you consider using your phone to buy a product?