Thursday, July 26, 2012

Smartphones become the new credit cards

Your smartphone is a money machine, and I don’t just mean those outrageous monthly bills. At thousands of businesses, you can use a phone instead of a credit or debit card to make purchases. It’s a slick idea that works well enough to make me nervous.
Google Inc. offers Google Wallet, which lets you pay by tapping an Android phone against a terminal. There’s also LevelUp, a Boston-based company whose smartphone app pays your bill by displaying a bar code. And Square Inc., the company that lets anybody accept credit card payments through a smartphone, launched a service that uses your face as a substitute for the card itself. Even PayPal, the online payments company, is getting into the act, with an app that works a lot like the one from Square.
These apps are hardly more convenient than the card in your wallet, but they are cleverly designed and fun to use. They all do basically the same thing — use your smartphone to dip into your credit card or checking account — but each one works differently.
Google Wallet, for example, uses near-field communications chips, which are built into certain phones that run the company’s Android operating system. The chips communicate on contact with the credit card terminals at many retail stores. When you set up an account, you enter your credit card information into your Google Wallet. Then you can use that card by entering a PIN and tapping the phone against the terminal.
Major retailers throughout the United States have Google Wallet-compatible terminals, including Macy’s, Walgreens, CVS, and Old Navy. And Google Wallet is backed by the world’s biggest, richest Internet company. So it’s bound to catch on, yes?
Maybe not. Right now, only a few of the newest Android phones are compatible, and only one of the nation’s four biggest cellphone carriers — Sprint Nextel Corp. — allows its Android phones to interact with Google Wallet. If you use AT&T, T-Mobile, or Verizon Wireless, you’re out of luck.



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