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A barista processes a customer's payment using Square, a device that turns a mobile device into a card swiper. More businesses are using the devices to simplify credit card payments. Others are embracing technology that allows consumers to pay with their cellphones. (MCT/Landov)

What's In Your Wallet? Wait, You Don't Need One

by Steve Henn
Aug 16, 2012 (All Things Considered)

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Most Americans pay with plastic or cash when they visit the grocery store, buy their daily coffee, or fill up the gas tank. But a growing number of large companies are trying to change that.

Google, Starbucks and Wal-Mart are among the many firms that are eager to replace consumers' wallets and stores' cash registers, with smartphones and other mobile devices.

Recently, Intuit — the company that owns the personal finance site Mint and makes TurboTax and Quicken — has been selling a small attachment for smartphones called "Go Payment." The device lets almost anyone, anywhere accept a credit card.

Girl Scouts On The Cutting Edge

Omar Green, Intuit's director of strategic mobile initiatives, says he saw the future when he stumbled on a savvy Girl Scouts troop.

"It became very obvious to me that there was a grand sea change in payments when the Girl Scouts started using Go Payment," Green says. "It was like, boom! It was crazy how much money these little girls were bringing in with Girl Scout cookies.

"So it hits me, we have got little 8-year-old girls who are not just consumers, but are merchants with Girl Scout cookies," he says. "So the next year, we went after the Girl Scouts in a major way."

For businesses, getting set up to accept credit cards was a big hassle five years ago. You needed to get a special machine to process electronic payments. Then you were charged a tangle of fees by banks and card processors.

"It's time to rethink these models," says Jack Dorsey, best known as the co-founder of Twitter. Dorsey's other company, Square, has blazed new ground in mobile payments. It developed one of the first little plug-in fobs that could transform smartphones into tiny little cash registers. It's also created an app that lets consumers pay for products just by walking up to the counter at a participating store and saying their name aloud.

An Increasingly Crowded Field

Even though only about 10 percent of the American public has ever used an app like this, the mobile payment space is getting crowded.

"Oh God, it's huge," Green says. "Everybody that thinks they can build you a mobile banking solution, is building you a mobile banking solution." Like Google, PayPal, Visa, MasterCard, AT&T, Verizon, T-Mobile and Sprint, just to name a few.

And Wednesday, more than a dozen of the nation's biggest retailers announced they are joining forces to build their own mobile payment network, under the name Merchant Customer Exchange (MCX).

Jeremy Mullman, spokesman for MCX, says the group includes Wal-Mart, Target, Sears, CVS, Lowe's, Best Buy, Publix Super Markets, 7-11 and more.

Combined, the participating companies have more than $1 trillion in annual sales — and pay billions in payment fees.

"We think if you have a common set of standards in mobile payments, you can eliminate a lot of those costs," Mullman says. "And that's obviously very important."

And with so much competition right now to build a "digital wallet," there are some predictions that payment fees for merchants could actually fall.

On Thursday, Square's Jack Dorsey announced a new plan for small businesses that would fix the monthly fees Square charges for credit card and mobile purchases at $275 a month.

"We wanted to focus this on small business — we wanted to make it even simpler," Dorsey says.

Simpler and cheaper for merchants, perhaps. But some say digital wallets will never take off until there's something in it for consumers, too.

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

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