Digital Wallets Have Yet To Catch On, JPMorgan Executive Says (reuters.com)

Despite major tech companies working aggressively on making digital wallet solutions available everywhere, these digital payment apps in our smartphones are yet to gain traction, according to Chief Executive of Consumer Banking JP Morgan Chase & Co. From a Reuters report: Apple Pay, Android Pay, and Samsung Pay are being used for less than 1 percent of payments at retailers, Gordon Smith said, citing industry data at an investor conference. Ultimately, the convenience of paying with phones will bring a surge of use from consumers, but it is impossible to know when that inflexion point will be reached, said Smith.

Comments

Chicken, meet egg

[cdrudge]

I bank with a decent sized local credit union. After they got finished patting themselves on the back for their technological advancement rolling out EVM cards, they refuse to support any of the digital wallets, including Apple's, Android's, or Samsung. Their reasoning (at least as of December 2015) is that no one is using them.

Well, it's kind of hard to use them if you don't support them and permit the card to be tied to a digital wallet. So we have a chicken an an egg problem. They won't be supported until usage goes up, and usage won't go up until they're supported.

Because there's no advantage

[AuMatar]

I don't go out and about without my wallet, so my credit card is always on me. Using an app isn't any more convenient, its less so. And I have to figure out the risks and insecurities of a new method of payment. I'll just keep swiping my credit card instead, thanks.

I mean really- who the hell really thinks taking out your phone, unlocking it, moving it over a sensor, and typing your pin into an app is more convenient then taking a card from your wallet and making one swipe?

Re:Because there's no advantage

[geek]

I don't go out and about without my wallet, so my credit card is always on me. Using an app isn't any more convenient, its less so.

It's not about convenience. It's about security. The apps are far superior from a security perspective. Leave your card locked up at home so no one gets it when they steal your wallet.

Re:Because there's no advantage

[The-Ixian]

Exactly. It's much easier for me to carry a single CC or Debit card, ID and/or a few bills in cash in my pocket than to carry a relatively heavy phone. Not to mention the effort of signing in to the phone, finding an app, waiting for it to launch then struggle with the payment because the PoS operator didn't hit the right key on their system or some such thing.

It is still simply easier to swipe a card or pay with cash.

Re:Because there's no advantage

[Lab Rat Jason]

You obviously haven't ever used a iPhone to make a mobile payment. It's WAY easier than any CC transaction, and no less than 10x faster than a chip based transaction.

Re:Because there's no advantage

[The-Ixian]

The only hitch there is you are now relying on a general purpose, always connected, mobile computer to hold the keys to the kingdom. We know that there are 0 days out there that can root your phone remotely.

At least with a CC, the would-be thief needs to get a physical thing and not just blast malware en masse.

Re:Because there's no advantage

[tranquilidad]

I use an Apple watch and it's a lot more convenient. I double tap the button and wave it over the reader and I'm done.

Using my phone would also be easier - I'd remove it from my back pocket and double tap the home button and wave it over the reader.

For my credit card - I remove the wallet from my pocket, remove the credit card and then figure out if it's swipe or insert for the chip. If it's insert then I have to wait for the network to complete the transaction before removing the card and re-inserting it back into the wallet.

There's no PIN for me to enter for any of the transactions. Signing requirements vary depending on the size of the transaction, the merchant and the card type.

So, sorting on convenience and time spent for the various options: watch, phone, credit card.

Re:Because there's no advantage

[DutchSter]

It's not about convenience. It's about security. The apps are far superior from a security perspective. Leave your card locked up at home so no one gets it when they steal your wallet.

Whose security exactly? Certainly not mine. If my wallet is stolen and I make timely reports my liability for any fraud on my credit cards is exactly zero. I have three credit cards but only ever carry two. Even if those two get shut down for a week while I await replacements I've got my third one at home.

One of my cards was tied up in the Target breach and even though I'd never had a balance higher than $1,000 on a $10,000 limit Bank of America let some fraudsters exceed my limit by over $15,000 making multiple purchases of $2,000 worth of gift cards within minutes of each other at a Sams Club before calling me to verify the activity. About a week later I got new cards in the mail along with an affidavit to sign which I gladly did. I was surprised to see that in the end when they reversed the $25,000 in charges they didn't bother to reverse the 2% cash back I earned on those purchases. I called three times asking them to adjust that as well. Finally after letting the credits sit on my account for six months with no reversal I said fuck it and spent the $500. I'm still a customer and never heard another word.

I don't care if my phone would be more secure because at the micro level it doesn't affect me one bit. One might say that we all pay higher costs because of fraud and while that's true if all fraud went away tomorrow the consumers would never see a dime. When the big bad banks had their debit card interchange fees significantly curtailed we were all told how great it was for the consumer. I didn't see a single price drop anywhere. I did, however, see CEOs of big retailers celebrating their increased profitability to shareholders specifically citing reduced expenses in the transaction processing category. So basically instead of one asshole group of companies exploiting consumers we just shifted it to another while patting ourselves on the back for doing something good for the little guy.

Re:Because there's no advantage

[cayenne8]

Several states, including California, are close to adopting digital drivers licenses [cnet.com] and state ID cards.

I'd still not use it.

You hand an opened phone to a cop to show your drivers license...you've also just handed then your phone, fully opened and gave them authority to search as they please.

No thanks, I don't open my phone for cops, hell, if I get pulled over and they ask me out of the car, I get out with window rolled up and I lock the door behind me.

"No officer, I do not consent to searches"...that goes for my phone too.

What's needed is universality

[presidenteloco]

The end user wants a single system that will work at most of the places they buy things at, regardless of whether they switch back and forth from iPhone to Android, and regardless of which bank and credit card they have.

Until the various industry players swallow their greed and agree to get together in a strong standards definition and implementation process and revenue sharing process that gives users this kind of universality, the momentum will continue to stall.

I've got 2 problems with a digital wallet

[Snotnose]

First, I don't trust the security of the phone. There is nothing on my phone that I would care about if a hacker got it. No logins, no passwords, no addresses. Just a couple apps and several phone numbers.

Second, I don't see why I should give big companies yet another chance to mine my data. Especially something as sensitive as my spending habits. I still use cash a lot for this very reason, every year my credit card company sends me a statement showing me exactly how closely they track my spending.

Re:I've got 2 problems with a digital wallet

[captaindomon]

Agreed. And the important point is that I don't trust my phone, or any of the equipment the retailer is using. I know that my credit card company / bank trusts my phone to allow the NFC transactions, and that's all I need to be indemnified by federal law and limited to $50 max damages by the Fair Credit Billing Act.

Re:I've got 2 problems with a digital wallet

[Snotnose]

My concern is not with telling me I spent $45.27 at Vons Friday, $52.87 at the gas station on Sunday, and $19.12 at Applebee's Tuesday. I'm fine with that and need it to verify I actually made those purchases.

No, what bothers me is the end of year statement has maybe 100 categories, from food,to alcohol to gas,to prescription drugs to amusement park admission to tires you get the drift. They tell me how much I spent in each category. As none of the amounts are 0 I assume there are more categories, they only print the ones with a non-zero amount.

Blame the Merchant Customer Exchange (MCX)

[Aqualung812]

The MCX, which has Walmart and CVS in their membership, wanted to push their anti-consumer CurrentC app so they could avoid credit card charges.

CVS even had a working mobile wallet payment system working with Android, but disabled it when Apple Pay was launched.

When the world's largest retailer doesn't want to support something, it gets hard to adopt it.

http://www.macrumors.com/2016/...

Because it's unnecessarily complex

[QuasiEvil]

I fail to understand why I'd want to pay with my phone.
A) Cash never runs out of battery, and the merchant can always verify it's valid without a network connection
B) Credit cards never run out of battery, and there's a backup process for when the terminal can't call home to momma (although imprint machines scare anybody under 30 if they have to use them...)
C) Mobile OSs are subject to security holes that are being actively pursued
D) I have to carry a wallet anyway. Drivers license, health insurance cards, *cash*, etc. So what does it gain me?

Seriously, this is the standard "wouldn't it be cool if your smartphone could..." sort of thinking, without pondering if it's really better to do those things with a smartphone.

Re:Because it's unnecessarily complex

[taustin]

All the crap in my wallet is still smaller and lighter than a smart phone. or even than my flip phone, for that matter.

I am curious a to who is responsible if someone steals your phone and hacks their way into it, and uses it to buy stuff. Once the new standards go into effect in October, I suspect that will be the consumer using the phone, because that's the lowest level of security (not using the chip). With a credit card, it might be the merchant (if they're not using EMV), if might be the merchant service, is might be my bank, but it won't be me.

Security is an advantage

[Sycraft-fu]

If properly implemented, and it seems Android and Apple do, contactless payment via your smartphone is a lot more secure than anything else. Some advantages it has:

1) A proxy number can be used for each transaction. Your real number need never be used at any time, as a proxy can be created for each transaction. The bank lets the phone know what proxies to use, and the phone lets the bank know when they are used. so even if the merchant gets completely owned, the information gleaned on you is useless as it was valid for that transaction only.

2) You have a device that can notify the bank of the validity of the transaction. Not only will the payment terminal contact the bank for payment, but your phone can let the bank know as well. Now there has to be some slack built in the system to make sure that it can work even if you don't have signal, but basically when your phone gets back on the network if the transactions don't agree, a flag can be raised.

3) You have some defense against a compromised terminal that overcharges (basically a merchant that has messed with their terminals to charge a different amount than displayed. Your phone knows how much the charge was, and shows it to you. If that is different from the amount on the screen, you can contact your bank there and then and stop the transaction.

4) The two-factor auth is taken off the device, on to your device. You have to unlock your phone to use the payment, so you have a 2-factor setup (your phone + either code or biometrics). However with chip+pin, the pin is entered on the terminal so if it is compromised, it can get your pin. The terminal can't get anything when a phone is used as the auth is on the phone, not the terminal.

It isn't flawless, but it is a decent step up from the security of just using a card.

Re:That's because the payment terminals are outdat

[cayenne8]

But I have came across people who scold me for using my Phone to Pay, the call me things like a Hipster.

While I have no problem with others that want to pay with their phone, I personally have NO interest in doing it myself.

I don't want any more of my info on my phone than there already is, certainly not my methods and ability to pay.

I prefer to use good old CASH for most of my daily, meatspace transactions. I take out a few hundred each week, and I can easily see what I'm spending in hard currency, rather than lose track easily during the week/month with the abstraction that is credit..

To me, a CC is like a chip in a casino, and it doesn't associate as well with real money spent. I think it is even worse on a phone as that you don't even have go throught the muscle memory action of physically pulling out a card, using it and replacing it in the wallet.

While I have no problem with folks that do wanna use their phone to pay, I can fully understand the myriad of reason one would not like to.

If nothing else, what happens to ones ability to pay if your phone dies?