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Review: Mobile payment needs better compatibility

Wednesday - 8/29/2012, 3:51pm  ET

By ANICK JESDANUN
AP Technology Writer

NEW YORK (AP) - For many of us, plastic has replaced cash for everyday shopping. If some technological wizards have their way, your phone will replace plastic one day.

We're still far from such a world, yet I was intrigued enough to try using my phone to make payments.

Over the past month, several major retailers announced plans to accept or expand such mobile payments, adding to services already available. One approach uses wireless technology to let merchants access credit and debit cards stored on your account, while the other uses a bar code on the phone screen that gets scanned at the register.

You might be wondering: Why fix what isn't broken, when plastic works just fine?

Systems that let you pay by cellphones can do more than store cards. Some can handle gift cards and coupons, so that discounts are automatically applied even if you left the originals at home. The mobile systems can also track patterns and perhaps reward you for repeat business.

You also get more security, at least if you trust the encryption provided. By the time you notice a card missing, someone could have gone on a shopping spree. You'd likely notice much sooner if you're missing your phone. With one call or visit to a website, you can disable access to all your cards at once. In addition, many services let you lock their apps with a security code, giving the cards extra protection.

Stores also might be able to reduce processing costs and, hopefully, pass the savings to you.

Here's how those promises met with reality using four systems I tried:

_ Bar code systems

You can enter any credit or debit card into LevelUp's app. You get $2 off your first purchase at each store and other discounts after you've spent a certain amount there. The store has a phone that photographs the bar code on your app and sends it to LevelUp for processing. LevelUp charges your card and pays the store.

At two pizzerias, the system picked up my bar code fine, even with shaky hands, though it failed at a pita place when I had my phone slightly angled. A manager had to be called in.

The other bar code system I used was on the app for Dunkin' Donuts. It works only with the store's gift cards, so you'd have to buy one with a credit card first. Unfortunately, the register's scanner was broken when I tried to order breakfast, and it took three employees to transfer the order to another register. In that chaos, the staff forgot to make my sandwich.

With uncertainties about whether I'd run into technical troubles on a given visit, pulling out plastic is faster and more convenient.

_ Google Wallet

This app lets you pay by tapping your device on a card reader at a store. It uses a wireless technology called near-field communications, or NFC, something that is starting to appear on devices running Google's Android mobile software.

A few dozen national chains accept Google Wallet using card readers equipped with MasterCard's PayPass technology. That includes at least four close to my home or office, but many more accept plastic.

The bigger problem: The app works with only a small number of Android phones on Sprint's network. The iPhone doesn't have the hardware. The other big wireless carriers have blocked or made it difficult to get Google's app even on devices that have the right hardware. That's because Verizon, AT&T and T-Mobile are jointly developing a competing wallet system called Isis. Can't everyone just get along?

I was able to borrow a Sprint device for my test and went on shopping and eating sprees at McDonald's, 7-Eleven and CVS and Duane Reade drug stores. It took several purchases and a few thousand calories to get the hang of it.

The first employee at McDonald's wasn't very helpful, suggesting that I try swiping the phone in the thin slot that barely fits the plastic card. I learned that it'll take more than getting the hardware in place to make mobile systems as ubiquitous as plastic. Customers and employees need to get used to it, too.

Google Wallet lets you store gift cards, but not those from the stores I have gift cards for. The app links to the Google Offers deals service and gives you instant discounts at some retail stores as long as you pay with the app. Again, none are for stores I plan to buy from in the near future.

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