Mobile Payments Start to Register

NEW YORK — Smartphones are playing a new role at retail.

The digital wallet is an emerging technology that allows shoppers to complete purchases at checkout with the tap or wave of a mobile phone, instead of using cash or credit cards. Possible now through a technology called near-field communication (a microchip found in certain mobile devices), the innovation is expected to impact the retail landscape in the coming years.

Market research company IHS projects that by 2015, 30 percent of all mobile phones worldwide will have NFC capabilities.

“Consumers have expressed an interest in being able to store their payment information on their smartphones,” said Bruce Berman, CFO of Bloomingdale’s and president of Bloomingdale’s Direct. “An organized electronic wallet will ultimately help customers keep track of their purchases and reduce the paper and plastic that is used for receipts and payment types.”

The department store’s parent company, Macy’s Inc., is testing mobile payments in 219 Bloomingdale’s and Macy’s doors in key markets such as New York, Los Angeles and Chicago. Last week, the firm announced plans to install signature keypads that can accept NFC payments at all department stores by fall ’12.

Berman added that digital wallets allow consumers to have credit cards, gift cards and coupons all in one place, which would in turn impact shoppers’ usage of those payment channels. “That should lead to improved redemption rates on those tender types,” he said.

Macy’s and Bloomingdale’s are two of the first department stores to partner with Google on its Google Wallet mobile payment service, officially launching later this year. The smartphone app stores a digital version of consumers’ credit cards, as well as customer loyalty cards, coupons and gift vouchers.

According to Google Wallet spokesperson Nathan Tyler, upcoming versions of the application will help retailers track the shopping habits of their customers. “The advantage for merchants is that it makes it possible for them to target offers to shoppers [who] have checked into their stores with mobile phones,” Tyler said.

Another emerging technology is Intuit’s GoPayment reader, which lets storeowners to snap a portable credit card reader onto any iPhone, iPad, BlackBerry or Android device and accept payments wherever they have mobile reception, including the selling floor.

Intuit charges retailers 2.7 percent per transaction or offers a “high-volume” payment plan for $12.95 per month.

“Mobile payments are really key to [Intuit’s] strategy,” said Trevor Dryer, GoPayment product manager. “We see it as a huge growth area for us; we’re seeing massive adoption and uptake right now.”

The firm, which also created QuickBooks and TurboTax, has seen a 20 percent increase this year in GoPayment, according to Dryer.

While many in the industry have high expectations for mobile payment, Retail Systems Research managing partner Brian Kilcourse said there are still some issues, particularly payment security.

“You wouldn’t want to have all your credit cards on your phone and have that phone stolen. Someone could drain your accounts in a heartbeat,” Kilcourse said. “There has to be a way for some entity to provision security and put programs in place to protect your information.”

Kilcourse likened the inception of mobile payment to the first barcodes during the 1980s. “Retailers are just waking up to how big of a deal this is,” he said. “So many consumers have adopted smartphones so fast, and it’s creating new opportunities for them to make payments in ways they haven’t before.”

And with consumers being more comfortable using smartphones for tasks such as downloading apps and paying bills, Todd Ablowitz, founder of retail consulting company Double Diamond Group, predicted 2012 will be a big year for the digital wallet.

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