How to Pay with Your Phone

Two weeks ago, we published a Facebook post about the security and convenience of mobile wallets like Apple Pay and Google Pay and heard from several people interested in learning more about the technology. Here is what you need to know about mobile wallets!

Are mobile wallets secure?

One of the concerns people often have when it comes to waving their phone near a card reader, to make a contactless payment, is security. In an age of social network and merchant-data breaches, how could putting your card information into your phone be more secure than using a plastic card?

Whenever you make a purchase, your phone sends a unique transaction code and a special number (or device identifier) that is unique to your mobile wallet. This means your card number is never stored on your device and the merchant doesn’t know your card number. If someone tried to re-use your unique, one-time transaction code, your financial institution would automatically deny that transaction and flag it as fraud. This means that in the worst-case scenario where a merchant/retailer is compromised, no bad actors could ever spend your money!

But what happens if someone took your phone? Most modern phones have several layers of protection to keep them safe from bad actors. Biometric security, like your fingerprint or facial scan, keep people out of your phone who aren’t you. Even if you only use a six-digit passcode on your phone, there are one million possible passcodes! To make storing information even more secure, many modern phones, like the Apple iPhone or the Google Pixel, have special chips that isolate your device identifier and transaction code generator from the rest of the system. That means that even if you installed a virus on your phone, it would be physically isolated from that secure information.

In Summary: Your account number/card number is never stored on your phone and when you pay, card numbers are never shared with merchants.

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How convenient are contactless payments?

Now that you can rest easy knowing that paying with your phone is one of the most secure ways to pay, it’s time to talk about convenience. As more and more people upgrade to modern smartphones and the technology becomes an integral part of our daily lives, the likelihood that you’ll have a phone in your hand when you’re out buying lunch or shopping for the holidays is very likely. This means you never have to dig for a big bulky wallet when you are standing at the register. Just pull out your phone where you have all your credit and debit cards, rewards cards, health insurance cards, vouchers, bus tickets, and plane tickets. They’re all in one place, easy to access, and ready to go.

The other benefit? You don’t have to wait for your transaction to process. With chip cards, you have to insert the card into the card reader, wait for it to be read (if they’re even read the first time), enter more information, and then wait for a horribly grating buzz to tell you your transaction is done. All you need do with a mobile wallet is wave it quickly at the machine and you’re done. When I use Apple Pay at stores here in Montpelier, often the cashier doesn’t even realize I’ve already paid—it goes so fast!

Pro tip: for those of you who have an Apple Watch, you don’t even need to pull back the sleeve of your coat to have the watch send its unique transaction ID and device identifier to the retailer. Try this for yourself and have people look at you with wonder as you wave your coat sleeve over a register and walk out.

Can a mobile wallet make traveling easier?

Traveling with a mobile wallet is a fantastic experience, especially if you plan on taking public transportation. While most people end up waiting in line to get a subway card or train ticket once they’ve arrived at their destination, nearly every major city accepts mobile wallets. This means you get to skip the line, go right to the turnstiles, waive your phone at the pad, and you’re in! I used this every single day while traveling in London and never had to purchase an Oyster Card.

Speaking of traveling abroad, mobile wallets in other countries are extremely convenient. The UK and Japan have reached nearly 100% adoption of contactless payments, meaning you can pay for everything, from a fancy meal in a restaurant to sending a few bucks to a busker on the street. Plus, the added security of using a mobile wallet means some banks don’t even need you to submit a travel notice!

Pro tip: Some financial institutions can remotely send new payment information to your phone if you lose your physical card and need a new one fast. Instead of waiting for the new card to arrive in the mail and get activated, ask your financial institution if they can activate that card in advance in your mobile wallet! This is great for traveling if you lose a card or wallet but still need to pay.

Who takes mobile wallets?

Pretty much everyone takes Apple Pay or Google Pay today, from small businesses and farmer’s markets to grocery chains and everything in between. Even if a business does not say they accept Apple Pay, modern point-of-sale machines all take contactless payments. Look for this symbol, a glowing green light on the register, or ask the clerk if they take contactless payments.

Sometimes the clerk will say no, I’ll waive my phone at the register, and voila, the clerk was simply unaware that the machine could take my mobile wallet!

There are some holdouts and late adopters of mobile wallets though. While some gas stations take contactless payments at the pump, most do not (although you can usually pay inside). Restaurants—mainly those that bring your check to the table—are not yet suited to offering payments via your phone.

You can also use mobile payments online. The most widely accepted wallet is Apple Wallet/Apple Pay which is accepted at most big retailers and uses the same security as if you were paying in person (described above). Security is needed even more online, thanks to the fact that you are typing in your card number into a web form if you choose not to use a mobile wallet.

Pro tip: Scroll down for a list of places local to Montpelier that I’ve seen accept mobile wallets.

Conclusion

In some countries, contactless payments have reached nearly 100% saturation. While the United States has been slow to pick up on the trend, contactless payments are getting more popular thanks to their convenience and security. Even if you don’t plan on using your mobile wallet regularly, it is still a great thing to try and be comfortable with in-case you leave your wallet at home. I think if you try it, you’ll love it!

A few places I’ve used Apple Pay in Montpelier

• Hunger Mountain Co-op
• Shaws
• Dunkin Donuts
• Cumberland Farms
• Walgreens
• Aubuchon Hardware
• Capitol Grounds
• Alla Vita
• Subway
• Blue Stone
• Birchgrove Baking
• Meadow Mart
• Yankee Wine & Spirits
• Wayside Restaurant & Bakery

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About Oliver Ames

Oliver is VSECU's social media strategist and spends most of his day engaging with members through our Facebook, LinkedIn, Twitter, and Instagram profiles. He has a background in science education, non-profit fundraising, business communication, media production, and membership-based organizations. When not at work, Oliver spends much of his time with his wife and son at their home in Montpelier.

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