Bits: I’m Still Waiting for My Phone to Become My Wallet

A truly mobile wallet — one that would let you easily pay for restaurant meals, subway rides or beers at a bar with a quick wave of your cellphone — has long been described as imminent. But it remains elusive. Some innovations have begun to bridge the gap, but most have been a disappointment or have not yet worked well enough for mainstream adoption.

In 2012, Square, which makes a credit card reader that can be plugged into an iPhone or iPad, worked on a credit-cardless system that let people pay for goods without ever pulling out their wallets or phones. When Square users walk into a store in its network, a Square-enabled register shows pictures of their faces, which are used as authentication for payment. But the app can be awkward to use.

Last summer, Apple introduced Passbook, a digital system for storing boarding passes, movie tickets, loyalty cards and gift cards on the iPhone. But it doesn’t do much beyond that, at least not yet. Google worked with major credit card companies and banks to create its Wallet app, which lets people pay for items at some stores by waving their phones but is available only for Android devices. Visa offers two digital wallets, payWave and V.me, but I’ve never seen anyone use them or signed up myself.  And the major mobile carriers in the United States banded together to form Isis, a mobile payments network, which has yet to roll out nationally.

Starbucks has arguably had the most success with the pay-by-phone idea in the United States. The company has persuaded millions of people to download an application that can be used to pay for their lattes. It works like a digital gift card — but only at Starbucks, obviously, so it’s limiting. (The company also invested $25 million in Square and is incorporating Square’s technology in its stores.)

When I complain to friends and colleagues about the inconvenience of fumbling around for my wallet when I’m shopping — and say I wish I could just use my phone instead — they often give me bewildered looks.

Apparently, that’s because paying with a phone today is rarely easier than paying with a credit card. Paying via phone often involves a series of awkward swipes and taps to start the transaction, and the process can be disrupted by spotty wireless connections, low batteries or other electronic hiccups.

“No one wants to be the guy holding up the grocery line at 6 p.m.,” said Joshua Reich, one of the founders of Simple, a banking start-up company that gives people free checking accounts and offers them data-rich analyses of their spending and saving habits. “You don’t want to look like that dork, the guy riding a Segway.”

Jan Dawson, an analyst at Ovum who covers the mobile industry, agreed.

“Mobile payments are trying to solve a problem that doesn’t exist for most people,” he said. “You don’t hear people moaning about how hard it is to pay with their credit cards or debit cards.”

The biggest problem for paying by cellphone is that so many kinds of businesses are competing to offer services. Companies as varied as phone carriers, banks, credit card companies and technology start-ups have had plans to get into the mobile payment business, but many are locking horns over who can profit the most, Mr. Dawson said.

“Everyone wants to be the primary payments provider,” he said.

Wireless carriers, desperate to bolster their revenue, are reluctant to hand over potentially lucrative streams to companies like Apple and Google, which already make billions from devices and the software that runs on them. Banks and credit card companies are also rolling out mobile checking services and applications, both to impress their younger users and to keep a hand in a game where billions of dollars are at stake annually, largely from the endless parade of small fees racked up with each purchase. And industry heavyweights like PayPal and Groupon are also scrambling to get their own offerings into the market.

It’s tough to persuade major retailers to spend money to work with Google Wallet or Apple’s Passbook, for example, when so many other options are still on the table. And what is popular today might be outdated in a few months.

Part of the reason that Starbucks’ own app works so well is that the company invested significantly to build out the infrastructure in its stores — sleek phone-scanning kiosks and mobile apps that work reliably and efficiently.

“There is a lot of reluctance in installing a lot of technology, especially if they aren’t sure it’ll take off,” said Rob von Behren, one of the lead engineers at Braintree, a payment services company that powers and processes transactions for popular services including Uber, the mobile taxi service, and Airbnb, the travel rental site. This reluctance leads to an “infinite waiting period and slows the growth of an industry,” he said.

Mr. von Behren was one of the creators of Google Wallet before he left to work at Square and later at Braintree. He said that while his Google team’s original goal was to simplify online purchases, it quickly realized that nudging mobile e-commerce forward seemed more urgent.

A large portion of shopping begins on cellphones, but getting to the final checkout remains a challenge because entering payment information on a small screen is clumsy. And most traditional big-box retailers that could build infrastructure to support mobile payments came of age “in an era where there wasn’t network connectivity,” making it harder to update their cashier software, payment methods or loyalty programs, Mr. von Behren said.

He ultimately decided that working with legacy retailers to create a system for in-store shopping with cellphones was a “tremendous juggling act.” He added, “It kind of worked and it kind of didn’t.”

BUT a new generation of innovation is coming, he said, so he thinks that wide use of pay-by-cellphone systems will arrive eventually. Braintree recently acquired Venmo, a company that lets people send money to one another via simple text messages. In addition, some promising newcomers say they are working on more complete alternatives.

Clinkle, a start-up, has persuaded a notable roster of venture capitalists to funnel $25 million into its mysterious and forthcoming mobile payment services. And a new company, Lemon, is working on its own digital wallet.

I guess I’ll have to wait and see. For now, I’ve come up with my own workaround for hot weather: securing my credit card and driver’s license to my iPhone with a rubber band. But it’s not what I had in mind when I pictured paying with my phone.

Gadgetwise Blog: Great Sound, and Easy on the Wallet

The Jax in-ear headphones from Sol Republic.

Expanding its stable of audio products, Sol Republic recently introduced a line of low-priced in-ear headphones called Jax.

Jax headphones run about $40 each, or $20 less than Amp headphones, their counterparts at Sol Republic. The sound engine in Jax is new, but not as powerful as Amp’s. Still, Jax delivers clarity and a booming bass, Sol Republic’s signature sound.

Designed for everyday use, Jax has a long, flat cord that won’t tangle. And at 54 inches long, it easily reaches my work computer, allowing me to lean back in my desk chair while listening to music. The durable cord is equally capable on the go; I could plug the headphones into my iPhone, slide the phone into my pocket and head home on the subway without worrying about disconnecting the cord.

However, I was concerned about the earbuds, which were a bit too heavy and had a tendency to pop out of my ears. And that long cord actually worked against the headphones, constantly tugging at the earbuds. I was eager to try the headphones on a run in Central Park, but I was distracted the whole time because I was trying to find a secure fit.

I tried replacing the ear tips with other sizes, but I still could not get a good fit. My other option was to jam the tips into my ear canal, something I’m certain my doctor would not recommend.

A three-button remote control and microphone at the yoke allows for adjusting the volume and switching to phone calls on Apple devices. The remote also works as a single-button universal control that is compatible with other devices, including Android phones like the Samsung Galaxy.

The Jax headphones come in blue or white and are available on the Sol Republic Web site and at electronics retailers. Offering great sound, they are a good alternative to higher-priced in-ear headphones; I just wish the design was better.

The Campaign to Digitize Your Wallet Is Intensifying

That’s hardly certain, because any company offering mobile payments faces a big challenge: convincing people that paying with a phone is safer and more convenient than using cash or a credit card.

But the partnership will clearly give a lot more exposure to Square, a company in San Francisco with about 300 employees, and to the idea of mobile payments in general.

Square isn’t yet near getting the big numbers it needs to become a mainstream replacement for the wallet. To date it has 75,000 merchants using its technology to accept payments. It refuses to disclose the number of consumers using its Pay With Square app, presumably because there aren’t enough to brag about.

“The biggest friction has been places to pay,” said Jack Dorsey, the founder of Square, in an interview. He said that with so many different companies trying to get a piece of the market, paying with a phone has been a “fragmented” experience. But the Starbucks partnership should widen the use of Square specifically, he said.

Indeed, businesses of all kinds, including big companies like Google, Microsoft and Sprint and small start-ups like GoPago and Scvngr, are hoping to profit from mobile payments — if only they can figure out what kind of system appeals to consumers and merchants.

Google has developed a mobile wallet app that uses a technology called near-field communication, which allows a phone to communicate wirelessly with a nearby cash register. GoPago has an app that lets customers place an order before arriving in a store; it shows up on a tablet on the merchant’s counter. Square offers businesses software for the iPad that shows pictures of nearby customers who are using the Pay With Square app on their smartphone, so all they have to do is state their name to pay for an item.

Starbucks stores will begin accepting a less ambitious form of Square payments this fall, when customers will be able to show a Square bar code on their smartphone at the register. The companies expect 7,000 Starbucks stores in the United States to be hooked up to the new system before the holiday season.

Starbucks has already been accepting mobile payments through its own bar code app. With one million app transactions a week, Starbucks is the most successful example of mobile payments to date, according to Denee Carrington, an analyst at the research firm Forrester. She said the partnership should make Square the biggest player in mobile payments.

“They’ve been working with the moms and pops of the world, small coffee shops and that kind of thing, but this certainly gives them another level of presence in the market,” Ms. Carrington said. “Now in addition to the neighborhood coffee shop, they’ll be at every corner of New York City.”

But not everyone is convinced that Square’s close relationship with a behemoth like Starbucks is such a good idea. Seth Priebatsch, chief executive of Scvngr, a start-up that offers a mobile payment app called LevelUp, said the move could risk alienating other big retailers.

Square has invited Howard D. Schultz, Starbucks’s chief executive, to its board. That would give the coffee company influence over how the payment system is developed, which could scare other big retailers away from adopting it, Mr. Priebatsch said.

“If I was Dunkin’ Donuts or 7-Eleven or Peet’s Coffee, I wouldn’t touch Square with a 10-foot pole,” Mr. Priebatsch said. “Giving one retail partner undue influence over a whole payment ecosystem is a dangerous precedent to set.”

Mr. Dorsey said he didn’t think of it that way. He said that for retailers considering a mobile payment system, what mattered most were the numbers of customers it brought to the table and the overall cost of operation.

“I don’t think this sets the tone in a negative way in those conversations,” he said. He added that retailers had been asking Starbucks for advice because of its success in innovations.

But if Starbucks was already so good at getting people to pay with their phones, why should it hand over the keys to someone else? Mr. Schultz said using Square might eventually help Starbucks reduce some of the expense of credit card transactions, known as interchange fees.

Square says that it makes moving money around more efficient by cutting out middlemen and dealing with a unit of JPMorgan Chase to handle its credit and debit card transactions, which helps lower costs. Mr. Dorsey explained that as a younger company, Square had the advantage of using newer technologies to improve the transactions process and save money. Square’s current fee for merchants is 2.75 percent of each transaction. Adding millions more purchases through Starbucks could improve efficiency further and bring that fee even lower, he said.

“A lot of the industry is working off legacy code from the ’70s,” Mr. Dorsey said. “All this has been rewritten, vetted and audited, and that allows us to be much more agile and reduce the overall cost of the system.”