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Report: Mobile Wallets in the US – Review and Analysis

August 30, 2013 by Mobile Payment Magazine

Mobile Wallets US ReportA new report entitled Mobile Wallets: The U.S. Landscape by Mercator Advisory Group identifies U.S. mobile wallets by category and technology.

The physical wallet might someday go the way of the checkbook, used by few and no longer a necessity. Growing consumer use of smartphones is creating a market for mobile wallets capable of serving many of the same purposes physical wallets served for centuries but now are able to take advantage of a plethora of new functions made possible in an increasingly digital marketplace. [Read more…]

Filed Under: Featured, Research Tagged With: ACI Worldwide, Amazon, American Express, Apple, Apriva, AT&T, Atos Worldline, Attido Mobile, ATX Innovations, bango, BarclayCard, BarTab, BBY Solutions, Belly, Best Buy, Blackhawk Network, boku, Braintree Payment Solutions, Burger King, CashStar, Cellfire, Certify, Clutch Holdings, Coop Financial Services, Corefire, Cumberland Farms, DeviceFidelity, Discover Financial Services, Dunkin Donuts, Dwolla, eBay, Fandango, Fifth Third Bancorp, Firethorn Mobile, FIS, Fiserv, Fortumo, FreedomPay, Giftango, google, Green Dot, GrubHub, Hailo Network, iCache, Ingenico, Intuit, Isis, JVL Ventures, Kinetic Farm, Lake Trust Credit Union, Lemon, LevelUp, Live Nation Worldwide, MasterCard, MCX, mFino, mFoundry, Microsoft, MindMatics AG, Monitise PLC, mopay, Mozido, MShift, National Payment Card Association, NCR, Oberthur Technologies, Pango Shyyny USA, Paperlinks, Parkmobile USA, Payair US, PayByPhone, Paycloud, Paydiant, Paydragon, PayOne, PayPal, PreCash, Proxama, PXT Payments, QuickPay, Research in Motion, RideCell, RideCharge, SafetyPay, Salt Technology, Samsung, SCVNGER, Sears Holdings Management, Shazam, ShopKick, ShopSavvy, Sionic Mobile, SK C&C USA, Spindle, Sprint, Square, Starbucks, T-Mobile, Target, Text2Pay, TMG Financial Services, Tyfone, Uber Technologies, VeriFone Systems, Verizon, Visa

Mobile Payments Report: Opportunities and Strategies for Credit Issuers

August 14, 2013 by Mobile Payment Magazine

Mobil - Credit IssuersA new research report from Research & Markets entitled Opportunities and Strategies for Credit Issuers, examines mobile payment opportunities For US credit issuers.

The major card networks began supporting contactless payments nearly a decade ago, but consumer and merchant adoption has lagged considerably. Several startups, as well as established firms outside of the financial services industry, are marketing enhanced mobile payment services capable of causing significant disruption to the consumer payments value chain. [Read more…]

Filed Under: Research Tagged With: AT&T, Bank of America, Citibank, Device Fidelity, FIS, Fiserv, Gemalto, google, HTC, Isis, JPMorgan Chase, LG, MasterCard, MCX, Paydiant, Research and Markets, Samsung, Sprint, Starbucks, T-Mobile, U.S. Bank, Vantiv, Verizon, Visa, Wells Fargo

Research Report: Positioning for Payments in the New Mobile-Social Technology Era

March 23, 2012 by Mobile Payment Magazine

We are at the beginning of a new technology cycle as consumer adoption of mobile and social media extends the reach of the web and integrates those media into the physical world.

Facebook is only eight years old, and yet its planned $5 billion IPO is the largest Internet IPO ever. As in every new technology cycle, network effects make room for new players and the creation—and destruction—of vast amounts of wealth.

The Gang of Four—Apple, Amazon, Facebook, and Google—is a group of network players entering the banking and payments environment. How will the strengths and weaknesses of the Gang of Four play against those of major financial institutions, payment networks, and wireless carriers? Surprisingly, PayPal rates on equal footing with the Gang of Four when it comes to innovation and emerges as a possible leader in the next tech cycle.

Research & Markets recently released a report entitled Positioning for Payments in the New Mobile-Social Technology Erathat  focuses on the relationship of brands to consumer perceptions of trust, innovation, and privacy in order to identify opportunities and threats.

Primary Questions

  • What is the newest technology cycle? Which brands are positioned to take advantage of the next cycle?
  • What models are developing that will intersect with the financial services space?
  • How will the strengths and weaknesses of the Gang of Four play against those of major financial institutions, payment networks, and wireless carriers?
  • How well do consumers trust the Gang of Four compared with the major financial institution, payment network, and wireless carrier brands when it comes to their financial information?
  • How do consumers rate the Gang of Four compared with the major financial institution, payment network and wireless carrier brands when it comes to protecting their private information?
  • Which brands are viewed as most innovative?
  • How do customers of the primary financial institutions rate their own institutions on the issues of trust, innovation, and privacy?
  • How should brands position themselves to best compete in the new technology cycle?


Methodology
The report is based mainly on data collected online from a random-sample bank benchmark panel of 5,878 consumers in December 2011. The survey targeted respondents based on proportions of gender, ethnicity, age, and income representative of those of the overall U.S. online population. The margin of sampling error is ±1.28% at the 95% confidence level.

It is also based on a survey of 5,211 consumers conducted online in October 2011 on KnowledgePanel. This sample is representative of the U.S. census demographics distribution and is recruited from the Knowledge Networks panel. Data is weighted using 18+ U.S. Population Benchmarks for age, gender, race/ethnicity, education, census region, and metropolitan status from the September 2011 Current Population Survey (CPS) and household Internet access from the October 2010 CPS Supplement. The margin of sampling error is ±1.73% at the 95% confidence level.

Table of Contents

  • Overview
  • Methodology
  • Executive Summary
  • Platforms That Are Able to Gather the Biggest User Base Usually Gain the Most Power and Wealth in Each
  • Technology Cycle
  • Mobile + Social Defines the Newest Technology Cycle
  • Wealth Is Created—and Destroyed—During Each New Technology Cycle
  • Apple, Amazon, Google, and Facebook
  • Platforms That Gather the Biggest User Base Usually Gain the Most Power and Wealth in Each Technology Cycle
  • Mobile Platform
  • Two Diverging Views of Mobile Success—Open (Google) vs Protected (Apple)
  • Social Media Platform
  • Mobile-Social Integration Opens Opportunity for Competitor to Move on Facebook
  • Game-Changing Business Models Rapidly Emerge During Times of Technological Upheaval
  • Tablets
  • Alliances Can Use Mutual Strengths and Weaknesses Can Fill Gaps to Respond Faster and with Better Products
  • Javelin TIP Model for Mobile Wallets
  • Trust
  • Apple Leads in Innovation—at Least for Now
  • Innovation
  • Privacy
  • Don’t Count out the Financial Institution’s Primary Relationship with the Consumer
  • No Brand Reaches the Gold Zone—Without an Alliance
  • Appendix
  • Related Research
  • Companies Mentioned

– Amazon, American Express, Apple, AT&T, Bank of America, Chase, Citibank, Discover, Facebook, Google, MasterCard, Microsoft, PayPal, Research In Motion, Sprint, Twitter, U.S. Bank, Verizon, Visa, Wells Fargo, zvelo

More information: Research and Markets

Filed Under: Research Tagged With: Amazon, American Express, Apple, AT&T, Bank of America, Chase, Citibank, Discover, Facebook, google, MasterCard, Microsoft, PayPal, Research in Motion, Sprint, Twitter, U.S. Bank, Verizon, Visa, Wells Fargo, zvelo

Isis Selects Gemalto for NFC and Mobile Payment Services

December 12, 2011 by Mobile Payment Magazine

GemaltoGemalto has been selected by Isis to secure its mobile commerce platform through Gemalto’s Allynis Trusted Service Manager (TSM) solution. Isis, the mobile commerce joint venture between AT&T Mobility, T-Mobile USA and Verizon Wireless, will provide consumers and merchants with an open and secure mobile commerce platform that will revolutionize how consumers shop, pay and save. Gemalto is a leading digital security company.

“We selected Gemalto for their long-standing relationships with financial institutions and mobile operators, which includes experience in securely provisioning services over the air and issuing sensitive financial information to the consumer,” said Ryan Hughes, Chief Marketing Officer of Isis. “Gemalto’s dedication to security is unmatched in the industry and will provide the Isis Mobile Commerce Platform with the necessary infrastructure to ensure consumer and merchant confidence in the Isis Mobile Wallet.”

Isis will enable consumers to enjoy the speed, security and convenience of mobile contactless payment using NFC technology at retail outlets such as restaurants, movie theaters and drug stores. Consumers will be able to securely pay, present loyalty cards, and redeem coupons all with a tap of their phones.

“Gemalto is thrilled to support Isis in delivering the speed, security and convenience of mobile contactless payment,” added Sebastien Cano, Senior Vice-President, Gemalto North America. “Using our extensive experience with worldwide commercial deployments Gemalto has designed a solution for Isis to support mobile payment and a host of NFC services like digital couponing and loyalty programs, access control and mass transit.”

Gemalto provides personal mobile services, identity protection, payment security, authenticated online services, cloud computing access, modern transportation, e-healthcare and e-government servicesthrough its secure software, a wide range of secure personal devices, and managed services to wireless operators, banks, enterprises and government agencies.

Gemalto also provides products for electronic passports and identity cards, two-factor authentication devices for online protection, smart credit/debit and contactless payment cards, as well as subscriber identification modules (SIM) and universal integrated circuit cards (UICC) in mobile phones. In the emerging machine-to-machine applications Gemalto supplies wireless modules and machine identification modules (MIM), as well as  server platforms, consulting, training, and managed services.

The Isis consortium is a  joint venture is between AT&T Mobility LLC, T-Mobile USA and Verizon Wireless and is based in New York City. The venture is chartered with building ISIS, a national mobile commerce platform that  will be available to all merchants, banks and mobile carriers.

Source: Gemalto

Filed Under: News Tagged With: Allynis Trusted Service Manager, AT&T, Gemalto, Isis, mobile wallet, Ryan Hughes, Sebastien Cano, T-Mobile, Verizon

Mobile Contactless Payments Summit: Oct. 17-18, 2011, Chicago, IL

October 7, 2011 by Mobile Payment Magazine

Strategic Solutions Network (SSN) will welcome an estimated 400 executives from leading retailers, banks, carriers and technology companies to attend the Mobile Contactless Payments Summit  October 17-18th, 2011 at the W Chicago City Center.

The 3rd Mobile Contactless Payment Innovations Summit is part of the Alternative Payment Systems Innovations (APSI) series of conferences featuring the top visionaries in the mobile space who will examine the disruptive nature, promises and challenges of the rapidly evolving mobile payments industry.

“We have developed the agenda to focus on the most advanced and value-added developments within mobile payments. This has resulted in over threefold audience growth since our Inaugural event last October,” comments SSN CEO, Aron Barkan. “This illustrates that contactless payments is not just a trend, but will soon become a ubiquitous and universally adopted global solution.”

Conference organizers note that  senior executives should incorporate a sophisticated mobile payments strategy into their overall business plan. The World Payments Report 2011 projects that mobile payments will grow globally from 4.6 billion to 15.3 billion transactions between 2010 and 2013 – at a rate of 48.8 percent per year.

Additionally, a new study from Juniper Research has determined that the total value of mobile payments for digital and physical goods, money transfers and NFC (Near Field Communications) transactions will reach $670 billion by 2015, up 178% from the $240 billion estimated for 2011.

The two-day conference features best practice case studies, keynote presentations, panel discussion and networking sessions delivered by executives from leading companies such as Paypal, Google, Walgreens, Best Buy, Groupon, MasterCard, Bank of America, Nokia, The Home Depot, Polo Ralph Lauren, Jamba Juice, Discover Network, RadioShack, National Retail Federation, Barclaycard US, Citigroup, Verizon, National Restaurant Association, American Express and others.

For more information:  Payment Innovations

Filed Under: Events Tagged With: Alternative Payment Systems Innovations, American Express, Bank of America, Barclaycard US, Best Buy, Citigroup, Discover Network, google, Groupon, Jamba Juice, MasterCard, Mobile Contactless Payments Summit, Mobile Payment Conferences, National Restaurant Association, National Retail Federation, Near Field Communications, NFC, Nokia, PayPal, Polo Ralph Lauren, RadioShack, Strategic Solutions Network, The Home Depot, Verizon, Walgreens, World Payments Report 2011

Why Google Wallet Will Own the Mobile Payment Space

September 22, 2011 by Mobile Payment Magazine

Almost four months after Google first revealed its new mobile payments application, Google Wallet, the app is finally rolling out to the masses this week. Unfortunately, only a few smartphones – including the Samsung (SEO: 005930) Nexus S and Nexus S 4G – currently have the revolutionary chip built in. That’s why competitor services like PayPal, Square and the ISIS platform from Verizon, AT&T and T-Mobile are hoping to swoop in and corner the mobile payment market. And many experts are predicting that they could do just that. But they’re dead wrong!

I’m not convinced that any of these services can compare to what the Google Wallet platform has to offer. And here are three reasons why…
[Read more…]

Filed Under: News Tagged With: AT&T, Google Wallet, Isis, Mobile Payment, T-Mobile, Verizon

Research Report: 2011 Contactless Near Field Communication (NFC) Mobile Payments

September 5, 2011 by Mobile Payment Magazine

Javelin Strategy and Research has release a new report entitled “2011 Contactless Near Field Communication (NFC) Mobile Payments: Framing Mobile Payments on the Foundation of Mobile Banking.”

Mobile payments have been the source of much excitement for over half a decade, with the latest focus being on near field communication (NFC) payments, which uses short-range wireless technologies to allow a consumer to tap or wave a supporting mobile phone to complete an in-store payment.

Late 2010 experienced a flurry of NFC-related mobile payments announcements, detailing pilot initiatives from numerous financial institutions (FIs), payment networks, mobile phone carriers, technology giants, and third-party developers.

Despite this activity, mobile contactless/NFC is a payment option that is battling limited availability of contactless-ready merchant terminals and mobile technology, as well as low consumer demand. In order to ensure the greatest opportunity for success, FIs should integrate NFC mobile payments with their existing mobile banking platform. Javelin data shows that mobile bankers are the prime financial demographic to jumpstart mobile payments, and FIs should promote the service accordingly.

Primary Questions

  • What is the current state of the contactless payment market, and how has it changed from recent years?
  • What are the key drivers preventing consumer adoption of contactless payments?
  • How should FIs integrate mobile contactless pilots within their existing financial infrastructure, and who should the target demographic be?
  • What are some of the current NFC programs in market today?
  • What is the demographic makeup of today’s contactless payment population, and how can that information be utilized to boost mobile NFC adoption?
  • How can FIs establish the value proposition of NFC among merchants, in an effort to increase merchant acceptance of the service?

Report Index

  • Overview
  • Primary Questions
  • Methodology
  • Executive Summary
  • The State of U.S. Contactless and Mobile Commerce
  • The Consumer Roadmap to Mobile Payments
  • Mobile Banking as the Springboard for Mobile Contactless Payments
  • Demographic Trends – Who Are the Likely Mobile Contactless Users of Today?
  • Mobile Contactless Payments: The Proverbial Chicken and the Egg Dilemma
  • Appendix
  • Related Research
  • Companies Mentioned

Table of Figures

Figure 1: Mobile Payments Ecosystem
Figure 2: Percent of Consumers Who Indicate That They Are Open to Using a Contactless-Enabled Card or Device, 2007-2010
Figure 3: Key Drivers Preventing Contactless Adoption, by All Consumers
Figure 4: Consumer Adoption Roadmap to Mobile Payments
Figure 5: Likelihood of Storing Credit or Debit Card Information on Mobile Phone to Complete a Mobile Payment, by Mobile Bankers and All Consumers
Figure 6: Factors That Drive Contactless Use, by Mobile Bankers and All Likely or Current Contactless Users
Figure 7: Last Time Made Purchase Using Mobile Device, by Mobile Bankers and All Mobile Phone Owners
Figure 8: Frequency of Mobile Purchasing in the Past Month, by Mobile Bankers and All Mobile Phone Owners
Figure 9: Average Mobile Purchase Amount, by Mobile Bankers and All Mobile Phone Owners
Figure 10: Desirability of Mobile Phone Functionality, by Frequent Mobile Bankers, Mobile Bankers (Past 90 Days), and All Mobile Phone Users
Figure 11: Likelihood of Using Mobile Contactless, by Gender, Generation, and All Consumers
Figure 12: Likelihood of Using Mobile Contactless, by Ethnicity and All Consumers
Figure 13: Likelihood of Using Mobile Contactless, by Smartphone Owners, Standard Mobile Phone Owners, and All Consumers
Figure 14: Likelihood of Responding to Mobile Marketing Coupons or Promotions, by All Mobile Contactless Users and All Mobile Phone Owners
Figure 15: Percent of Consumers Who Have Used Particular Contactless Payment Devices, 2009-2010
Figure 16: Likelihood of Using a Contactless-Enabled Card or Device, by Mobile Bankers and All Consumers
Figure 17: Average Times Per Month Consumers Use a Particular Payment Option Per Month for In-Store Purchases
Figure 18: Likelihood of Using Mobile Contactless, by Income and All Consumers
Figure 19: Likelihood of Using Mobile Contactless, by iPhone Owners, BlackBerry Owners, and Android Owners

More information: 2011 Contactless Near Field Communication (NFC) Mobile Payments

Filed Under: Research Tagged With: AT&T. Isis, Bank of America, Bling Nation, Cardlytics, Cashedge, Citibank, ClairMail, DeviceFidelity, Discover, Edo Interactive, Fiserv, google, LivingSocial, M-Com, MasterCard, mFoundry, PayPal, RIM, Samsung, T-Mobile, VeriFone, Verizon, Visa

Intuit GoPayment App to Be Offered by Verizon Wireless

August 25, 2011 by Mobile Payment Magazine

Verizon Wireless and Intuit Inc.  today announced a strategic alliance to give small businesses – from the sole proprietor to a medium-sized business – the ability to process credit card payments on smartphones and tablets.

The companies are now offering Intuit’s GoPayment app and pocket-sized credit card reader in Verizon Wireless’ 2,300 retail stores and business-to-business sales channels.GoPayment makes it easier and more affordable for small businesses to process credit cards and for anyone who sells products or services to accept credit card payments wirelessly. The card reader simply plugs into the audio jack of a supported smartphone or tablet.

Credit and debit cards can be swiped through the card reader or entered into the app manually. The transaction is processed immediately and funds are automatically deposited into a user’s bank account within a few business days.

GoPayment supports devices on Android, BlackBerry and iOS platforms for most popular 3G and 4G LTE smartphones and tablets.

“Intuit’s GoPayment on America’s most reliable network is a mobile transaction game changer, and brings another dimension of must-have technology to the small business community,” said Mike Schaefer, executive director of the Business Solutions Group for Verizon Wireless.

“Payments and transactions are often the biggest hurdle businesses face. Our value proposition is to streamline, simplify and enable business owners to get paid with minimal delay. This collaboration with Intuit is an important part of our strategy to bring the most innovative online and mobile tools to our customers.”

“Rather than lose out on potential business, anyone who sells a product or service can now easily and affordably give their customers the option of paying with plastic,” said Chris Hylen, general manager of Intuit’s Payment Solutions division.

“GoPayment is meeting a huge need and is one of the fastest growing mobile payment solutions in the market. With Verizon Wireless, we’ll help even more people discover that they too can process credit card payments on the phones or tablets they already own.” To save time when processing payments, GoPayment offers the ability to create and sell from a list of frequently sold items. Depending on the types of goods and services sold, users can choose to apply sales tax, add tips and send customized receipts via text message and email with a map of where the transaction took place.

To protect data, sensitive credit card information is never stored on the phone. The data is also encrypted – once via the card reader and a second time via the GoPayment app.For the more than four million small businesses that use QuickBooks, GoPayment can also sync transactions with recent versions of QuickBooks – PC, Mac and soon QuickBooks Online – to save time by reducing manual data entry.

GoPayment also supports up to 50 users on one account, which is ideal for businesses with multiple employees who work in the field.

Source: PR Newswire

Filed Under: News Tagged With: GoPayment, Intuit, MobilePayment, Verizon

Verizon To Integrate American Express’ Payments on Mobile Phones And Tablets

August 10, 2011 by Mobile Payment Magazine

American Express and Verizon Wireless today announced they will integrate Serve, a next-generation digital payment and commerce platform, on many Verizon mobile phones and tablets. Over the coming months, Verizon Wireless customers will be able to establish Serve accounts that will enable them to make payments and redeem offers for goods and services directly from their mobile phones and tablets using Serve.

Serve simplifies the online checkout experience by authenticating a mobile number, then allowing a customer to make a purchase on-screen. Verizon Wireless customers who use Serve can expect to buy goods and services on their mobile phone in just a few clicks. Merchants who accept Serve mobile payments will enjoy a streamlined option for processing and settlement. The Serve card is currently accepted by the millions of merchants in the United States who accept American Express.

American Express and Verizon Wireless will also collaborate to source, distribute and simplify redemption of online and mobile offers with participating merchants through the use of the Serve account. For example, as customers redeem certain offers or coupons using their mobile phones, the credit may automatically appear in their Serve account.

The two companies are also working with Payfone to support Serve checkout on Verizon Wireless devices. Payfone’s pre-authorization and intelligent routing features will help Verizon Wireless customers who use the Serve application make mobile payments simply and securely.

“Our collaboration with Verizon highlights the speed at which Serve is evolving to reach a wide audience,” said Dan Schulman, group president, Enterprise Growth, American Express. “Verizon Wireless customers will soon be able to complement their busy lifestyle with a trusted payment platform that delivers a fast, flexible and secure way to manage their day-to-day mobile purchases, and together we’re taking the necessary steps to make mobile commerce a reality.”

Greg Haller, president, Enterprise & Government for Verizon Wireless, said, “Serve provides a quick and intuitive way for our customers to use their mobile service in a refreshingly convenient way. Our commitment to building the entire mobile payments ecosystem, through our Isis joint venture and now with Serve, gives customers incredible new ways to use their mobile devices.”

Source: Verizon Wireless

Filed Under: News Tagged With: American Express, American Express Serve, Dan Schulman, MobilePayment, Verizon

Hidden Costs in Cell-Phone and Digital-Wallet Payment Services, Says Consumer Reports

August 2, 2011 by Mobile Payment Magazine

While Americans are still using plenty of cash, checks, credit and debit cards to pay their bills, new electronic methods such as paying by cell phone or digital wallets are emerging. Before jumping in, consumers should be aware of the disparity in loss liability and consumer protections they offer, according to Consumer Reports.

CR’s latest investigation into these new payment options finds that banks and technology companies are jostling for a greater share of the $50 billion a year in fees generated by everyday transactions. Some services by PayPal, Obopay, Square, Zong, and FaceCash already allow you to pay for purchases with your cell phone, but so-called digital wallet services are scheduled to hit the market soon.

Google said in May that it planned to launch its version this summer. At least three competing digital wallets are planned for launch later this year and in 2012: from Visa in partnership with more than a dozen banks; Isis, a joint venture of AT&T Mobility, T-Mobile, and Verizon Wireless; and PayPal Mobile’s point-of-sale technology.

“As these new forms of payment grow more popular, consumers must be careful to understand the costs, and disparities in protections associated with the promise of new convenience,” said Jeff Blyskal, sr. editor Consumer Reports.

Despite all the hype, consumers don’t seem to be clamoring to pay with their phones yet. According to a recent nationally representative survey by the Consumer Reports National Research Center, only 5 percent of survey respondents have used their cell phone to pay for day-to-day purchases in the previous month. Somewhat more use other fairly new forms of payment, including billing to their home or cell phone account (10 percent).

Most of the new electronic payment options are tied to credit and debit cards, so whatever costs consumers incur in using their plastic will transfer to the new methods. Paying by mobile phone won’t save them money. Google Wallet merchant transaction fees are the same as those charged on plastic payments, and the same is expected to be true for Visa’s digital wallet. Square and PayPal Mobile charge merchants even more than the average big bank fee, 2.75 and 2.9 percent of the transaction amount, respectively.

Among payment processors Consumer Reports looked at, only Obopay charges consumers (not merchants) an explicit flat 50-cent fee for payments over $10. You can transfer funds to your Obopay account from a bank account at no cost, but if you link a transaction to a debit or credit card, you’ll pay a 1.5 percent fee. So on a $100 payment, fees can run from 50 cents to $2.

Prepaid debit cards can be especially costly, whether you use them by themselves or link them to an alternative payment method. Many prepaid debit cards charge fees for activating and maintaining the accounts, and for transactions, balance inquiries, and reloading.

Things often go wrong during the processing of 300 million noncash payments each day. In a Consumer Reports survey, one in four Americans said they had an unauthorized charge, billing error, noncredited payment, or other problem in the last year when paying for purchases or paying bills.

A consumer’s right to get their money back when something goes wrong—errors, goods not delivered as promised, fraud — varies by the payment option used. Again, the underlying method of payment tied to your mobile device will govern their rights in such instances. Cell phone and digital wallet payment services linked to a credit card offer consumers the most protection. However, there is a large disparity in protection for services that link to prepaid debit cards and direct billing to consumers’ phone bill.

Prepaid cards offer consumers no guaranteed protections against unauthorized transactions. The cards may have some protections in their contracts, but they’re essentially voluntary and can be rescinded at any time. Visa and MasterCard prepaid-card holders may get assurances from those brands’ zero-liability policies, which protect against unauthorized use and require issuing banks to give provisional credit for losses from unauthorized use within five business days of notification. But those policies have loopholes. Visa’s doesn’t cover ATM or PIN transactions not processed by the Visa network. MasterCard’s policy offers no protection if a consumer reported two or more unauthorized events in the past 12 months, and it doesn’t cover ATM or PIN transactions.

For consumers who opt for direct-to-phone bill charges, their rights in this area are unclear. Any protections are based on the wireless carrier’s contract, and they vary widely. Consumers Union reviewed the contracts of 18 wireless carriers to find out what kind of baseline protections they contained; none provided protections for mobile payment transactions that are as strong as those guaranteed by law when consumers use a credit card or debit card.

Consumers may have some rights under state laws or public utility agency rules, but those also vary from state to state. So far, only the California Public Utilities Commission provides its state’s residents the right to reverse unauthorized charges. California consumers can also bar third parties from putting charges on their phone bill.

The bottom line—Consumer Reports offers the following advice for those considering the jump to any new form of digital payment service:

  • Before signing up for a new payment method, read the fine print and check the transaction costs.
  • Pay by credit card to get the best protections whenever you buy online or pay via cell phone, make a major purchase in a store, or worry that a seller might not deliver as promised. Avoid prepaid debit cards and billing to your telephone account.
  • Ask your carrier to block third-party charges to your landline and cell phone.
  • Take convenience claims with a grain of salt. Consider new payment choices, but separate true benefits from marketing hype.
  • Keep your mobile shopping tools independent from any branded digital wallet you might choose.

You can control the risk of loss by knowing the threats with each form of payment and taking steps to protect yourself. Don’t share your personal identification and account information, use security software and procedures for your e-commerce, and always keep cash and payment cards in a safe place.

The complete investigative report, including more information on the convenience come-on and security fraud issues surrounding new ways to pay at ConsumerReports.org or in the September, 2011 issue of Consumer Reports.

Source: PR Newswire

Filed Under: News Tagged With: AT&T, FaceCash, MobilePayment, Obopay, PayPal, Square, T-Mobile, Verizon

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