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Google Wallet Not Ready for Prime Time

This article was written by Flexo in Consumer. 7 comments.

Simplification is usually a good choice for finances whenever it is available, and the bulky wallet is due for a technological upgrade, simplifying back pockets of men’s jeans everywhere. I’ve received the occasional comment about my “George Costanza” wallet; as I collect receipts from my day-to-day transactions, the leather becomes increasingly distended. Google’s first in the United States on the train towards eliminating this particular bulge and lightening the load for those who carry cards and money in bags. In fact, Google re-purposed a clip from Seinfeld to tease the public about this forthcoming technology.

In Europe, this technology already exists, even if it isn’t ubiquitous yet: your mobile phone will be able to function as a payment mechanism with merchants who accept credit cards. New mobile phones will include a chip that securely transmits a credit card number of choice to a cashier’s receiver. Just like the PayPass or other credit card technologies that allow you to wave your plastic like a Jedi to pay for your groceries, cell phones carrying digital wallet applications will theoretically take the place of your bulky, card-filled wallet.

Despite strong marketing from Google and other companies getting ready to launch digital wallet services, there are still some barriers to this technology.

Most phones do not contain the NFC (near-field communication) chip that makes secure wireless communication between the phone and a retailer’s receiver possible. In fact, the Google Nexus S is the only phone in the United States that contains this technology as of today.
The Google Nexus S is only available on Sprint. Consumers who want to take advantage of this technology right away would need to leave Verizon Wireless or AT&T.
Not all credit card companies are on board. Google Wallet is launching with help from Citi and MasterCard. Visa, American Express, and Discover will operate with slightly different technologies. They’ve made the details available to programmers, though, and the issuers may be included in future versions of Google Wallet, or they will sponsor their own, competing applications.
Many people are still skeptical of security. I’ve often maintained that secure digital communication is more secure than handing your credit card to a waiter who disappears for five minutes, but there is a mistrust of credit card databases stored by financial companies. In order to use technology like this, you provide your credit card information to yet another third party.
With more of your financial information in the hands of others, you are open for more and better-targeted advertisements and unsolicited offers. Using a digital wallet will certainly require your agreement with a document outlining terms of use, and that document will undoubtedly reduce your rights to privacy. Your credit cards know where you spend your money and how much. Do you also want Google to know?
This service may replace your cash and credit cards, but that’s only part of your wallet. You may use your wallet to hold your identification and driver’s license, your health insurance identification card, your roadside assistance card, your mass transportation access card, your office security key, and your casino player’s club card, just to name a few. Some of these may be supported by Google Wallet and similar applications in the future, but some won’t.
Until all merchants accept wireless transactions, you’ll still need to carry your credit and debit cards. In fact, even if a merchant accepts NFC payments, if the technology is a little old, it won’t accept payments from cell phones.
My cell phone’s battery is generally dead by the end of the day. Without a wallet and without a back-up battery, how will you pay for an item with a phone that won’t turn on?

If you’re an early adopter of technology, feel free to jump on the bandwagon. Google Wallet is not quite ready for mass consumption.

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Citi Dividend Card Changing Cash Back Benefits

This article was written by Flexo in Credit. 30 comments.

Several years ago, the Citi Dividend Platinum Select MasterCard was a great credit card to use for the spending you would have done anyway. At that time, you could earn 5% cash back on all your purchases. For a time, I was able to charge my rent payments to the credit card. That’s a dangerous proposition for some people, but if you pay the bill in full every month, all you see are benefits.

After some time earning some of the best cash back rewards available, Citi began converting many of the Dividend Platinum Select MasterCards to Dividend World MasterCards. “World” may mean nothing more that the cards have “PayPass” enabled. PayPass is a technology that includes an embedded radio transmitter (RFID) inside the plastic, so rather than scanning the strip — or even using a manual scanner to imprint the raised card number on a slip through carbon paper — users can magically wave their card in front of a reader that activates the chip and receives the card information through an encrypted radio signal.

From MasterCard’s point of view, they can charge merchants a higher interchange fee for accepting these cards. Citi, on the other hand, was paying out too much money in cash back rewards, so they eventually reduced the benefit from 5% cash back to 2% on select purchases and 1% on all other purchases.

The Great Rebate Shrink hasn’t ended. While cardholders of the Dividend World MasterCard like myself will continue to earn 1% on all purchases, 2% cash back or more will be earned from different categories every three months and will require enrollment every time the categories change.

Though you can currently request your rebate check at any time when you have accumulated at least $50 in cash back, starting July 1, 2010, checks will only be sent in increments of $50, increasing the chances you will eventually leave some cash unclaimed.

For the World MasterCard, the first categories earning extra cash back will earn 5%, undoubtedly higher than usual to encourage people to be excited about the program at first. The qualifying categories for this extra cash back are restaurants, car rentals, and hotels.

It may be worthwhile to use this card specifically for the varying categories earning the higher rate each quarter, but when the novelty wears off it may be easy to forget to enroll.

I received this bit of bad news in the mail today, but I also received some possible good news. I’ll share that notification tomorrow.

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Newer Credit Cards Are Less Secure

This article was written by Smithee in Credit. 12 comments.

Every Tuesday, Smithee presents an article about his own experiences with credit cards and observations about the credit card industry.

A few weeks ago I was the victim of debit card fraud. In my case the system worked very well. The bank’s automatic mechanisms noticed a few big-ticket items being purchased in Chicago, which is quite far from where I live. The first one went through, the second one was held up and I started getting calls from the bank’s fraud detection department.

So, that card number had to be canceled and I got a replacement with a new number within a few days. The money was also refunded, but the surprise came when I noticed the new card had that little “PayPass” logo on it. You know, the thing that’s supposed to let you tap the card against a reader instead of sliding it through the reader? (Think of the time saved!) The old one didn’t have PayPass on it, and I was ambivalent about the technology, having read reports about how it’s not all that much faster.

The bigger problem is that it uses RFID, which is not exactly ready for prime time. To make a long story short, people can easily, and cheaply, extract the data from your card without you knowing. Here’s a video with a demonstration: