NEW ORLEANS — Cash, coins and credit cards are so 20th century.
At least, that’s the opinion of electronics manufacturers, phone companies, banks and credit-card issuers that expect cellphones to be the main way consumers pay for purchases in the not-so-distant future.
The trouble is that vision-of-tomorrow is somewhat blurry, as evidenced at the recent U.S. cellphone industry trade show. There are a lot of ideas, but little agreement.
The stakes, however, are high. “Eighty-five percent of the world’s transactions are still made with cash and checks. We have a wonderful opportunity to convert those,” said Gary Flood, MasterCard’s president of global products and solutions, in a keynote speech at the show.
One concept that gets a lot of attention is the “digital wallet,” a virtual repository for credit-card numbers, receipts and coupons. It’s not much different from a PayPal account, which can be linked to different cards. A lot of companies see the wallet as the key to influence in the world of mobile payments, especially if it sits on a cellphone, not just on a PC. Google introduced its Wallet last year. It’s available on a few phones that can be tapped against certain payment terminals to complete a payment.
Andrew Lorentz, a lawyer who works with the payments industry, said at the show that if he had a dime for every digital wallet that’s been announced, he’d be rich. “I can have more wallets than cards,” he said.
At the show, MasterCard announced a service that could speed up wallet proliferation even more. The company’s idea is to let any company that wants to set up its own wallet.
“The idea behind this is: How do we get more wallets and more innovation?” said Ed Olebe, MasterCard’s senior vice president of e-commerce development. Consumers trust their banks, he said, and might want to keep their cards in a bank-branded wallet.
A crucial question is what information the wallet issuer will be able to see about a consumer’s transactions. There’s valuable information there that could be used to target marketing offers or for loyalty programs. MasterCard is still working out those details, Olebe said.
MasterCard competitor Visa is more bullish about tap-to-pay phones. It has an online wallet like MasterCard, but also a wallet application designed to work on smartphones with built-in Near-Field Communications, which enables tap-to-pay transactions. But so far, the few smartphones in U.S. stores that have NFC chips work only with Google’s Wallet. What’s holding Visa and others back, said John Partridge, the president of Visa, is that the U.S. phone companies have to allow the banks to load cards for use on phones.
Naturally, the phone companies have their own ideas about how digital payments will look in the future. Sprint Nextel Corp. is collaborating with Google and its Wallet, while the rest of the Big 4 national wireless carriers, Verizon Wireless, AT&T and T-Mobile USA, have formed a consortium to create their own wallet.