In a sign that smartphone-based card processing is taking off, Bank of America is joining Square and mPowa in offering an attachment for smartphones that lets merchants swipe a customer's debit card or credit card to complete a purchase.
If you've never seen one of these devices, they plug into the headphone jack of a smartphone and use the phone's wireless connection to process payments. The customer part of the transaction boils down to looking at the total, swiping your card, signing the screen with your finger and entering in your phone number or email address so you can get a digital receipt.
Square, the company that pioneered the technology, probably isn't crazy about seeing its concept copied, but more vendors pushing smartphone-based payment services to merchants will probably mean wider adoption overall, especially considering the size and reach of Bank of America. That's a good thing for consumers who will be one step closer to ditching paper-based forms of payment forever.
For a while now, you've been able to use a debit card for the vast majority of purchases, but cash and checks continue to have a foothold in one area: small vendors like baby sitters, housekeepers and trainers who don't have the transaction volume or facilities to use conventional point-of-sale machines.
Smartphone-based payment systems can bridge that gap by offering a portable, simple solution to the debit-card problem.
I recently saw this work firsthand. Until about a month ago, one of the last checks I wrote regularly was for the tuition at a local martial arts school. I'm ashamed to admit that I frequently forgot to bring enough cash or a check to pay on time, and many of my fellow students were in the same boat. That was frustrating for the sifus, who had to pay the rent and other expenses for the school on the first of the month. And it's never a good thing when guys with extensive training in breaking bones and pulverizing pressure points are frustrated with you.
That's why I was really glad to see the school recently start taking debit-card payments using a Square device. The school gets its money, I get to avoid the hassle of picking up cash or remembering to bring my checkbook, and the payment clears my checking account quickly instead of sitting in there until the check is deposited and processed.
What do you think? Have you used one of these payment devices as a customer, or as a vendor? What was your experience?
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