Two weeks ago, in a monumental lapse of judgment, I lent my credit card to one of my teenage kids, and for the 800th time, the card never found its way back to me. After a desperate search and many denials over the next few days, I was forced to, once again, call the credit card company and cancel the cards for both myself and my wife. We now find ourselves in suspended consumerism, awaiting the new cards in the mail, which we're told will take us five to seven business days.
Which made me think. Why is this happening? Credit cards? Why are we still using credit cards? Wasn't that all supposed to go away by now? Aren't we supposed to be paying for everything with our smartphones by now? What happened to Google Wallet, the much-publicized service that would be changing the way consumers buy and retailers collect money? That's what I was told a few years ago when it was first introduced.
I'm sure you're also familiar with the promise by now. All your credit card info is securely stored in the cloud and accessed by Google Wallet when you want to buy something. At the point of purchase you tap your phone against a device on the retailer's counter and poof! the sale is magically accomplished, cash is transferred invisibly behind the scenes, your e-mail and purchasing patterns are sent to the retailer who can then use that information to offer you future deals, and your complete personal details are logged in by Google, which then uses that data to further rule the world.
And it's not as if there hasn't been progress. At the end of January, Google released its latest edition of Wallet, with lots of cool new features for paying, depositing and tracking history. It seems like a pretty neat app. That is, if there were any application for it. And sure, there are a few big retailers that have signed on for the NFC (or near-field communication) technology behind the Google Wallet service, like Foot Locker, Old Navy, CVS Caremark Corp. and RadioShack.
But Google Wallet isn't happening yet. And it isn't happening anytime soon. If you're a small retailer, don't count it into your 2013 plans. And probably not 2014 either.
IT'S GETTING CLOSER ...
That doesn't mean you should ignore mobile payments. Please don't. Last year was a breakout year for paying by smartphone and tablet. And for those in the retail business, this year is the year they need to seriously consider a mobile payment service for their store. That's what Starbucks did when it signed on with Square, the leader in the mobile payment field (at least for now). That's what Apple does when its associates swipe your card on the sales floor after you've spent half your weekly salary on that awesome new MacBook Air. And that's what retailers like Urban Outfitters are planning as they shed their cash registers and equip their salespeople with mobile devices to ring up sales and collect cash. Mobile payment applications like Intuit's Go Payment, Sage Mobile Payments and PayAnywhere are easy to set up and are fast becoming a popular way to speed up the selling process while collecting valuable customer information.
But all of these mobile payment devices and services are still based around the credit card. And my wife and I are reminded of this more than ever as we sit, paralyzed, waiting for our replacement cards to arrive. Why is this? Whatever happened to Google Wallet? The reason is simple: too much, too soon. With all of our technical progress, we are still doing many things the same way we did when Nixon was president. We're still pumping gas into our cars and driving them, instead of plugging them in and them driving us. We're using keys to unlock doors, wearing glasses, changing light bulbs and mowing the lawn. New technologies are making these tasks easier. But it takes time.
And the people driving Google Wallet are facing the same challenge: time.
There are enormous infrastructure challenges still to overcome. Not just the big chains, but my gas station, deli, pizza shop, drugstore, convenience store and all the other retailers I visit must also equip themselves with NFC devices so that's it's easy for me to use my phone. Unless they do and unless it's very simple, I'm not going to be inclined. In addition, my phone must carry the software and it must be super-simple to set up my credit card and banking information on it. And infallible.
We have not reached this tipping point yet. Want evidence? Why aren't we all using mobile boarding passes when we fly? Because not all the airports accept them and sometimes the readers don't work. I'm taking enough risk getting on that US Airways flight to Denver tomorrow. The last thing I need is a problem at the airport because my mobile boarding pass isn't recognized. For now, I'm sticking with paper.
And Google's competitors, like PayPal, Verizon, AT&T, T-Mobile and Apple, aren't going to make it easier either -- because they believe that their mobile payment services are better than Google's, and are making it more challenging for Google Wallet to be used on their devices. Consumers are being asked to take sides, when all we really want to do is pay for a couple of Snickers bars and a Red Bull. Throw in all the other interested parties -- banks, credit card companies, software makers, payment device manufacturers and eventually the government -- and you get an idea how complicated this all is. The market is confused by competing products. Until all these parties sit down at Yalta and divide up the world, most consumers and small businesses will be staying on the sidelines.
Someday our kids or grandkids will ask us what it was like in 2013 when we had to put gas in our cars, wear those silly eyeglass things on our faces and use those funny things called "keys" instead of our fingerprints to open a door. Someday we'll find an old credit card in a box of memorabilia and tell stories about the "good old days" when we had to suspend all purchases for a week when we lost our magic piece of plastic. And our kids and grandkids will look at us in wonder because everything they buy is through a personal device likely running Google Wallet. Someday. And I'm looking forward to it. But for the next year or two at the least, small retailers and other businesses that accept credit cards can worry about something else.
Gene Marks, CPA, is the owner of the Marks Group, which sells customer relationship, service, and financial management tools to small and midsized businesses.
