What would travel be without your trusty credit card in your wallet to pay for your airline tickets, hotel stays, car rental, meals and other expense while on the road? Evolving payment technology may soon change how you use that credit card and interact with merchants when you travel. Banks, e-commerce money transfer services (i.e., PayPal) and now Google are aggressively changing how payment transactions are taken and made.
Traditional credit card transactions are made by swiping your credit card at a merchant’s cash register (point of sale terminal) or providing your credit card number over the telephone to the merchant who manually enters it into their terminal to process the payment. This current process works well but is not without limitations and compromises. These compromises include:
For the merchant –
- A need to establish a merchant account with a payment service to accept credit cards and pay a fee to that service which is typically a percentage of the transaction plus an additional fee. This can be quite costly for small vendors who do not process sufficient volumes to get the best rates.
- Merchants are typically tied to their cash registers and credit card terminals which makes it difficult for them to be where their customers are, like a conference, sporting event or even the middle of a crowed airport terminal.
- Mobile credit card terminal solutions are bulky and cumbersome.
For the consumer/business traveler –
- Often need to carry multiple credit cards which can be bulky and cumbersome
- Credit cards expose sensitive information that can be stolen and misused like the actual credit card number or personally identifiable data that can be used for identity theft.
- Not all merchants accept credit or debit cards due the inability of the vendor to have a credit card terminal with them in cases like: a roving hot dog and beer vendor; mobile kiosk; independent contractor or door-to- door salesman.
The latest payment technologies address these limitations and are moving us closer and closer to becoming a cashless society. A great example comes through the use of the smartphone as an inexpensive on-the-go credit card terminal. This enables almost any vendor to accept a credit card – whether they are selling travel pillows in an airport terminal, umbrellas on a rainy day inNew Yorkor the Peanut Vendor who wants to sell you that $6.00 bag of peanuts at the ballpark. The smartphone has significantly driven down the cost of mobile credit card terminals and made them easily available to any merchant – big or small.
Another alternative for making and processing payments is PayPal, which is a very well established payment service that allows a registered user to make and accept payments for merchandise services. Transactions are facilitated through PayPal via the use of your e-mail address and a secure password. PayPal brokers the payments from bank accounts and credit cards without the user exposing actual credit card or bank account numbers, giving additional security and consumer peace of mind.
Further building on the convenience of smartphones for accepting credits cards is a fantastic service like Square ( www.squareup.com ), which allows anyone (businesses and consumers) to accept credit cards without needing to be an official credit card merchant or even being a business! What makes Square such a brilliant service is simplicity – simple sign-up process, simple and slick smartphone app (iOS and Android) and a simple and clever card swiping mechanism that plugs into the headphone jack on your phone. Square is ideal for anyone who wishes to make or receive credit card payments. I, for one, ran a great yard sale recently and was able to accept credit cards which really helped make more sales without the typical haggling that happens at these types of events. Beyond my yard sale example, the service is a tremendous business tool for small businesses or independent contractors to accept credit cards. Another clever use is when you’re stuck paying the bill for you and your buddies at your local watering-hole. You no longer have to hear your buddies say they will pay you later because they don’t have any cash – after you pay the bill you whip-out your smartphone and Square reader and take each buddies’ credit card payment. 😉
At some point in the future physical credit cards will be a thing of the past. Google, for one, is deploying Near-Field Communication (NFC) technology as the key component of their Google Wallet service. Google Wallet combined with NFC allows virtual versions of your credit cards to be stored securely on your smartphone, and with a simple tap and use of a PIN, payments can be made wirelessly to the merchant. Although NFC is not exclusive to Google or its exclusively limited payment services, Google is one of the major players in addition to other major banking institutions endorsing and promoting this technology as the future of payment services.
New technologies are quickly evolving and changing how we pay and get paid for things. So the next time you pull out your wallet and look at your credit cards, think about a future when that plastic may just be a thing of the past.