Thursday, September 27, 2012

Virtual schmirtual — the virtual wallet wars are a bust so far

The Wall Street Journal today reports what those of us who care about these things already know: There isn't a huge, pent-up demand for virtual wallet technology among consumers. Retailers are fired up and ready to go (in some cases, only half-heartedly), but customers aren't taking advantage of this new tech much yet.

Or at all. Consumer use of Near field Communication -- NFC, which beams payment information to a credit-card terminal — still looks very much like a novelty in the wild. Every one of the handful of times I've paid with a virtual wallet it has been then first time the cashier has seen it used. I am talking Home Depot, Radio Shack, Duane Reade. It's not scientific, of course, but it is still extraordinary. These are places that do a lot of transactions.

Starbucks is a big exception; they pioneered a rudimentary method which involves scanning barcodes stored on your smartphone. This is the same method Apple has now introduced with its foray into the virtual wallet, Passbook. And even though Starbucks has now paired with Square, they will still be doing it the old-fashioned way for a while, by continuing to scan codes rather than take advantage of the presence awareness which, under Pay with Square, identifies you, the customer, and your payment information on file, the second you walk into the place.

That's because Starbucks has discovered that, even in a low-tech application, paying with your phone is an easy habit to acquire: I will walk past places that probably make at least as good a cup of coffee as (and are far less crowded than) Starbucks just so I don't have to endure the inconvenience of using cash or a credit card. Your phone (or even your small tablet) is much easier to produce than your real wallet, and then produce something from that, and put away change, or shown the cashier your physical card ...

When authentication proceeds you, everybody wins. This would seem to be an even bigger win for the small business person. Alas ...

Just as troubling is that smaller storefronts which actually could benefit from this -- and convey a special brand of street cred at the same time -- also seem to be curiously behind the curve. I encounter virtual wallet tech in small establishments almost never.

Get ready for more unscientific anecdotes. One very hip establishment I know actually signed up for Pay with Square -- but hasn't set it up for months. This is a growler place, where you'd imagine a clientele hip to every cutting edge trend, not just the one of bringing home fresh beer in a bottle you supply.

But no. "You're the only person who asks for it," they tell me, each of the three times I've been there over three months, as they scramble to look for (and fail to even find) the Square dongle that is Plan B, which would at least let me pay with a physical credit card.

My iPhone notifies me as I approach the store that I am now ready to Pay with Square. That remains news to the proprietor.

I used Google Wallet in a major drug store chain the other morning (as an aside, the part of the credit-card terminals that indicate they are NFC enabled were all covered with ads. Sigh.) The transaction was not smooth. It needed a lot of coaxing, elongating what would have been a much faster sale if I had just used my darn credit card.

I thought the cashier was annoyed, and was prepared to meekly apologize for trying to pay so geekily. "That was cool," she said, intoning in that lower register that always conveys sincerity rather than sarcasm. I self-deprecatingly replied it would have been much cooler if it had worked the first time. "That was cool," she repeated.

Maybe there is hope for this. I sure hope so. This is one geeky tech that could easy go mainstream. But it hasn't yet, and the vendors are ahead of their customers, by a country mile. That's worrisome.

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