With the Mobile Wallet, A Way to Change How You Pay

Some of the biggest names in technology, finance and retail are unveiling the first major change in how customers pay at stores since the credit card was introduced in the 1960s: It’s called the mobile wallet.

The technology allows consumers to pay using their smartphones. Google, Wal-Mart, AT&T, Visa and PayPal are just a few of the companies vying for customers in this new market.

Thousands of New York City establishments are using the technology, though specific figures are difficult to determine. Last month, the city approved a pilot program for city taxis to use mobile wallets, which could expand to all cabs if found successful.

Though the technology has been widespread for years in countries such as South Korea and Japan for years, it has been slow to catch on in the U.S.

In those countries, government exerts great control over phone carriers, and pressured them to adopt a specific technology, called Near Field Communications (NFC). It allows consumers to pay by tapping their phones against a sensor.

Developers in the U.S. are struggling to determine what the nation’s definitive mobile wallet will look like. They have divided into two main camps: those backing NFC and those developing cloud-based apps, which do not rely on a phone’s hardware, instead using the Internet to transfer payment information.

Only a few phones currently support NFC technology—most prominently Samsung’s Galaxy Nexus and Nexus S. That has given cloud-based developers the upper hand, at least initially.

But, more phones are slated to support NFC, including Windows phones, Blackberries and new Samsung models. And, the largest companies in the market are betting on the technology.

Companies pursuing mobile wallets have split into two main camps:


Google Wallet
Google, Inc.
Released September 2011
Currently only supported on one phone: Sprint Nexus S 4G
Major merchants include Pinkberry, Macy's, Subway, American Eagle Outfitters and Duane Reade.
A partnership between three of the four largest phone carriers: Verizon Wireless, AT&T Mobility and T-Mobile USA.
Currently in a test phase, will launch this summer in Austin and Salt Lake City.
Deals in place with Visa, Mastercard, American Express, Discover, Capital One, Chase and Barclaycard.
Launched in November 2011 as an online payment service (like PayPal).
The service will expand to incorporate NFC mobile wallet technology at an unspecified date.
Apple, Inc.
In March 2012, the U.S. Patent and Trademark Office granted Apple a patent that would enable mobile wallet transactions using NFC. Apple has released no further details.
Released March 2011
Currently, the LevelUp smartphone app generates a QR code from a consumer’s credit card number. Merchants can scan the code with a sensor sold by the company. LevelUp has announced plans to use NFC as more phones incorporate it, and their sensors are already NFC-capable.
The company says it has 100,000 users and 2,500 businesses that use it.


Other companies are betting on cloud-based wallets. These do not require any specific hardware attachments like NFC. The user downloads an application to a smartphone, connects a credit card or bank account to the app, and then can authorize payment to participating merchants via the phone’s Internet connection.

Dwolla Spots
Dwolla Corp.
Released March 2011
In 2008, Dwolla started as a company focused on online payments (like PayPal). They became the first cloud-based mobile wallet with the launch of Dwolla Spots.

Pay with Square
Square, Inc.
Released November 2011
Available for iPhone and Android.
The company says 75,000 merchants accept Pay with Square in the U.S. In March 2012, 30 New York City taxis began accepting payments from the mobile wallet as part of a pilot program. If successful, it will expand to all New York cabs.
The online payment giant will begin launching a cloud-based mobile wallet service in May.

In addition, retail giants Wal-Mart and Target have teamed up to launch their own mobile wallet, but have not announced whether it will utilize NFC technology, a cloud-based app, or another method of transferring payments.