- WHITE PAPERS
Wells Fargo & Company is rolling out a Visa microSD mobile payment pilot that will include 200 Wells Fargo team members who are users of specific BlackBerry and iPhone models. The pilot features DeviceFidelity's In2Pay technology.
BlackBerry smartphone users will directly insert the In2Pay microSD card into the slot in their device, while iPhone users will receive the protective In2Pay Case for iPhone with the In2Pay microSD card. To make payments, users open the Wells Fargo Mobile Banking application, select "pay with phone" and wave the phone in front of the contactless reader at the point of purchase. The reader will light up and beep, indicating that the payment has been received.
Wells Fargo team members participating in the pilot will be able to use their personal BlackBerry smartphone or iPhone to make payments wherever there are contactless payment readers. Additionally, pilot participants can choose their payment instrument with the option of loading up to one Wells Fargo Visa Credit Card and one Wells Fargo Visa Debit Card.
The Wells Fargo test, if successful, could change the payments industry for good. Companies such as McDonald’s and Burger King are part of a two-dimensional mobile payment test through Bank of America, however the industry – in regard to both restaurants and banks – has been hesitant to develop and use a payments system using the swipe of a phone.
"Cash is still king in the QSR world," said Peter Wolf, ParTech's vice president of marketing and business development. "The growth of credit and debit has slowed down a bit with the economic meltdown. People just don't want to put stuff on their cards like they once did and this has slowed down the initiatives to grow mobile payments. I don't think it's going to last forever. Even so, cash is still close to 70 percent of transactions in QSR's."
While it's illegal to put a credit card number or any other kind of magnetic track data on something other than a physical credit card, Starbucks has figured out a way to conduct mobile payments via prepaid cards.
When a customer loads up a prepaid card online, the interchange fee collected by banks is taken out of that web transaction. The problem, Wolf said, is that not everyone wants to use a prepaid card.
Interchange fees also are an issue. The mobile payment ecosystem (banks, processors, credit card companies, mobile carriers and mobile phone manufacturers) hasn't yet agreed on a breakdown of interchange and transaction fees.
In the case of Wells Fargo, the cost of accepting Visa's payWave, or any other Visa transaction, is determined by the specific merchant and its acquiring bank, said Peter Ho, product manager for Wells Fargo Card Services and Consumer Lending.
"This is no different from the Visa payWave technology that is used in cards," Ho said.
Fit to be square
While financial institutions have been slow to develop mobile payments technology, solutions such as Square and FaceCash are making mobile payments possible.
In November, FaceCash announced a deal with Doctor's Associates Inc., the parent company of Subway, for deployment in certain locations in California. The application enables consumers to pre-fund a FaceCash account by transferring money from traditional checking or savings accounts. Consumers then debit their FaceCash balance by making purchases at participating merchant stores. The application is free, consolidates consumer loyalty program cards, and is available to iPhone, Android and BlackBerry users.
During a purchase, the consumer's face appears on the merchant's register to verify identity. The first time a buyer makes a purchase using FaceCash, the merchant matches the photograph provided during the sign-up process to the consumer's driver's license or passport to ensure identity validity.
FaceCash charges 1.5 percent per transaction and does not charge a recurring monthly fee for use.
Square user Scott Baitinger, founder of Streetza Pizza, pays a fee of 2.75 percent plus 15 cents per transaction. Streetza does about 100 transactions per day at its Milwaukee-based food truck.
While Square has been criticized for its inability to handle large transactional volumes, Baitinger said the solution has been perfect for his operation. In the case of Square, every transaction is run through the company so there's no contract and no monthly cost.
"What's cool is Square also has geo-location built in, so if you had multiple Square readers it automatically tracks where payments are made, it tracks tips and taxes and tracks top customer information. And it pre-populates a lot of the information," he said.
For companies the size of Starbucks, use of the Square is not necessarily realistic, but the test and implementation of 2-D scanning is.
Starbucks is testing 2-D barcode scanning in select markets, a technology already in use by airlines such as American, which gives customers the option of having their boarding pass sent to their mobile phone.
"As we saw with kiosk and self-service, airlines led the way to consumers' behavioral changes which crossed over into many other industries including retail and restaurants," Wolf said. "As the 2-D bar code becomes more prevalent for airline boarding passes, there is going to be room for that type of technology both in the payment space and with couponing and loyalty offers."
In terms of equipment, Wolf said the only technology needed for 2-D transactions is a scanner.
For example, one ParTech client is putting in new POS systems across its large network of stores. The group also is adding 2-D scanners "in anticipation of conducting transactions around loyalty and couponing,” said Wolf. “It's very forward thinking."