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Retiring Your Wallet? The Future of Mobile Pay

Mobile phones, more specifically smart phones, have changed the way we live and work. From basic communication with family and friends to being reachable by colleagues and customers 24/7, even the ability to settle an argument with a quick Google search. Endless information is at our fingertips and accessible whenever, wherever. And now, cell phones are changing the way we make purchases.

Forrester forecasts $52 billion in mobile payment spending this year and $90 billion in 2017. The topic has been heating up in the news lately, but detailed information about how to use mobile payments, where they’re accepted and the future of mobile pay is scattered. So, I’d like to cut through the clutter and drill down on mobile pay and what it means for you as a consumer, as well as what it means for government agencies.

There are currently three main types of mobile pay options – Apple Pay, Google Wallet and CurrentC – with advantages and disadvantages to each:

Apple Pay was introduced in October 2014 and can be set up in the “Passport App” on the iPhone 6, 6 Plus, iPad Air 2, and the iPad mini 3. Unfortunately, if you have an older Apple product, you’re out of luck. Only newer models have the Near Field Communication (NFC) technology that operates mobile pay. Apple Pay works when a supporting device approaches an Apple Pay-compatible point-of-sale system. The screen of the phone lights up and the phone opens Passbook automatically, allowing a user to tap on a credit card to be used. In most instances, it’s a one-step process for payment.

Google Wallet was introduced in 2011, before most of the mobile pay infrastructure was developed, requiring Google to create the technology from scratch. Because of this, setup is more complex, requiring users to enter account and routing numbers along with their full social security numbers, information that Google then stores. However, with Apple Pay, all personal information is kept with users’ bank and credit card providers. Google Wallet purchases are completed in much the same way as Apple Pay using NFC.

CurrentC was introduced in September 2014 to beta users and will launch nationally in the first part of 2015. It is run by the Boston-based Merchant Customer Exchange (MCX) and works directly with consumers’ bank accounts and gift cards rather than with credit cards. This is a huge benefit to merchants because it allows them to bypass the fees from credit cards for using their services. CurrentC is also an app available on both iOS and Android phones, but rather than NFC, CurrentC uses QR codes displayed on a cashier’s screen and scanned by the consumer’s phone, or vice versa, to initiate and verify the transaction. CurrentC also works with store loyalty cards to offer consumers coupons and discounts.

All three services claim to offer better security during transactions than the magnetic strip of credit and debit cards, but what makes the CurrentC offering unique is that it has the backing of some of the country’s largest retailers, including Best Buy, CVS, Lowe’s, Sears, Target and Wal-Mart. Because retailers need to support NFC readers at the point of sale, it’s generally considered an essential part of the mobile payment system to have their backing.

While mobile pay options may have immediate implications for your upcoming holiday shopping, what do they mean for government agencies? In terms of transactions, it’s much of the same. Everything from child support payments to property taxes could be completed through mobile pay in the future. More changes and infrastructure updates need to be made, but the opportunity is ripe.

When it comes to the retail mobile pay war, it’s unclear who will be the winner. CurrentC has the support and backing of some of the country’s largest retailers, but Apple Pay saw more than one million credit cards enrolled in the service’s first 72 hours. That is a lot of buying power and a big consumer lobbying force. Or, perhaps there is a mobile pay future where all three options are available for consumers to choose from? Whatever the scenario, cell phones are once again changing the way we live and work.

What are your thoughts on mobile pay? What service shows the most benefit to you?