Merchants and credit card processors are rushing to add the products needed for them to accept mobile payments, and the rate of innovation is incredible. Lets look at the benefits and pitfalls of life without a wallet.
What You Need to Go Mobile
Its surprisingly easy to start using mobile payments, and many people dont even know that payment options are available on devices they already have. Apple Pay and the upcoming Android Pay will allow you to save credit card information with just a few taps of a button if you have a participating card. Since over 95 percent of the smartphone market runs on either Apples iOS or Googles Android, its likely this is an option for you.
From there, its a matter of using your smartphone or connected smartwatch to pay at checkout. Tens of thousands of merchants are already accepting such forms of payment.
Innovation in Mobile Payments
In the past few months alone weve seen some big advances that allow mobile payments to play a bigger role in our lives. Mobile payments are now accepted at such common locations as McDonalds (MCD), Nike (NKE), Subway and Walgreens (WBA). Retailers adding mobile payments isnt all that much of a technological shift, since many point-of-sale devices take contactless credit cards, but its the advances outside of retailers that have made going without a wallet truly possible.
Credit cards provide consumers with a lot of benefits, but unfortunately, many of them also come with a number of undesirable fees. The average credit card charges six different fees, according to a 2015 analysis of 100 major credit cards by CreditCards.com. The good news is many of these fees are avoidable if you are a responsible and attentive cardholder. Card issuers are "targeting people who are asleep at the wheel, so to speak, explained Linda Sherry of Consumer Action. "Don't just wait month to month to see what's going on. Setting up auto-payments or regularly monitoring your online account can help you avoid late fees.
The most common credit card fees are for late payments, cash advances, returned payments, balance transfers, and foreign transactions. Only 26% of the cards surveyed had annual fees. The more unusual fees include account re-opening fees, returned check fees, overdraft protection fees, statement hard-copy fees, pay-by-phone fees, replacement card fees, expedited card shipping fees, and stop-payment fees. Subprime lender First Premier Bank even charges its customers an automatic $25 fee when they qualify for and receive increased credit limits.
"There are two main categories of fees: penalty fees and transactional fees, according to Matt Schulz, CreditCards.com's senior industry analyst. "Penalty fees are pretty easy to avoid, for example, by paying your bills on time. Transactional fees are more important to comparison shop. If you travel internationally a lot, a credit card that doesn't charge foreign transaction fees is a great value.Credit cards with the most potential fees
- First Premier Bank Credit Card (12)
- First Premier Bank Secured MasterCard (12)
- Credit One Visa Platinum (9)
- Fifth Third Bank Platinum MasterCard (9)
- Navy Federal Credit Union Platinum (9)
- Navy Federal Credit Union Cash Rewards (9)
- Regions Visa Platinum Rewards (9)
- PenFed Promise Visa Card (0)
- ExxonMobil SmartCard from Citi (3)
- Spark Classic from Capital One (3)
- Capital One Spark Cash Select for Business (3)
- Spark Miles Select by Capital One (3)
Once its stolen, Schober said, customers personal information can wind up on the darknet, the underbelly of the Internet. On one site, someone is offering to clone credit cards and provide samples of more than a dozen consumers stolen information.
As you scroll down, you can start to see theres their phone number, their full address, Schober said.
The information also includes full credit and debit card numbers complete with their respective PIN numbers.
So if you wanted to take out money right now, you could go down to the local ATM and take that money out, or do an online purchase, Schober said.
But years later, one victim of credit card fraud, Louis Gazzo of New Jersey, still has his private information out there, including something he didnt expect -- his mothers maiden name.
When someone steals from you, its insulting, it really gets to you, and there isnt anything Joe Smith can do about it, Gazzo said.
There is something card companies are moving to: the newer card technology called chip-and-pin -- a more secure chip in the card combined with the use of a PIN number. Many European countries put that in place years ago to combat fraud and, Schober said, its working, but the US is years behind.
Its not just a little bit behind. Its embarrassingly behind, he said.
He believes consumers should be upset they have not been protected over the past several years.
I feel that way personally. Ive had my debit card compromised, my credit card compromised personally, Schober said.
Credit card companies are changing over to chip-and-pin cards, but merchants still have to buy the machines.
Square, the maker of the card reader used by Schober, said they dont think they are any different from any other card reader. They said its not about the technology, but about whos using it.