Leave Your Wallet at Home: Mobile Wallet Payment Options

By Naomi Mannino, dealnews contributor

It probably comes as no surprise that as a society we are hyper-connected; for most of us, our smartphone never leaves our side. And according to research from Ipsos Open Thinking Exchange, we are connected to technology nearly every waking hour. Not only are we checking mail, sending text messages, and tweeting, but more and more folks are also using their smartphones while shopping to check for coupons, compare prices, look up product information, and even pay for purchases via their "mobile wallet."

Smartphone-powered mobile wallets are made up of apps designed to let customers pay for goods and services with just a swipe, a click, or a scan. There are a number of no-fee payment service apps that in addition to letting you leave your wallet at home, offer coupons and additional savings, track rewards, and showcase product and location information.

Just don't confuse a digital wallet with a mobile wallet. A digital wallet is one that is set up online. Think PayPal, Mastercard Paypass, or Visa V.me; all involve tapping a special card or logging in to an account to authorize a payment at a retailer point-of sale (POS) terminal. A mobile wallet, on the other hand, is one that authorizes a smartphone app to make the payment transaction with a quick scan of screen.

While this technology may seem a little sci-fi, the evolution toward more mobile wallet smartphone use is already upon us, as more than two-thirds of technology insiders believe that paying with a smartphone will outpace cash and credit card payments by 2020. The only major drawback, however, is that there's no single mobile wallet technology that all retailers use ... yet. Until then, tech savvy shoppers should weigh current mobile wallet app options.

Google Wallet

Google Wallet uses wireless technology based on a radio communication called near-field communication (NFC), which allows customers to pay for purchases by tapping their phone to a merchant's NFC-enabled terminal. It's very simple to use: just open the app, choose a credit or debit card, and tap your phone at the sensor. Users can store and use all major credit and signature debit cards from VISA, MasterCard, American Express, and Discover in Google Wallet.

Retailers That Use It: McDonald's, Dairy Queen, CVS, Walgreens, 7-Eleven, Old Navy, American Eagle Outfitters, Sports Authority, Office Max, Champs, and more.

Pros: Customers can use Google Wallet in-store anywhere MasterCard PayPass is accepted — at over 140,000 merchants nationwide. Plus, it's easy to store credit and debit card information in Google Wallet, and applicable points and rewards still automatically accrue.

Cons: Currently only a select few Android phones run Google Wallet

Will Google Wallet Help Me Save Money? Google's "Nearby Offers" are automatically enabled in Google Wallet, so consumers will see discounts available at nearby local businesses. Google Wallet can also automatically track stored credit and debit card rewards points and transactions when redeeming Google Offers at participating stores.


While Google Wallet requires tapping, paying with the Square application requires visual recognition. With the Square app open, customers just have say their name at the register to pay for their "tab" via a linked credit or debit card. The app even lets users auto-send their info to the Square merchant upon entering the store, though for security purposes a user's name and photo are used to verify purchases at the register.

Retailers That Use It: Best Buy, Target, Walgreens, Staples, and, most recently, Starbucks

Pros: Square connects users to merchants automatically and tracks all user-earned rewards at participating retailers. It even lists nearby Square retailers offering rewards. The Square app is available for both Android and iOS devices.

Cons: Only a small selection of retailers currently use this app, but the number is expected to grow.

Will Square Help Me Save Money? Square allows users to track their tabs at local merchants, monitor their rewards (and freebies), and find new stores that offer perks.


LevelUp is the only mobile wallet service app in our list that doesn't transmit any credit card or banking information to the merchant. Instead, once users have linked their payment information in-app, they're issued a token QR code that must be matched to two other QR codes via the merchant and LevelUp secure servers before payment is issued. This not only ensures security, but also simplifies protecting your identity in the event of smartphone theft: Just deactivate or reset the QR code!

Retailers That Use It: Many local city restaurants, mostly in larger metropolitan areas.

Pros: LevelUp is the easiest mobile wallet app to reset; there's no need to call and cancel linked credit cards in the event of a lost or stolen smartphone. LevelUp also offers new customers rewards at merchants upon their first purchase.

Cons: Currently only a small selection of local eateries offer payment by LevelUp, and it's not widely accepted in smaller cities or by national retailers yet.

Will LevelUp Help Me Save Money? Users will earn a few dollars to spend whenever they first try a new place. Plus, they can unlock even more savings as repeat customers.

Merchant-Specific Payment Apps

Of course some merchants are paving their own way in the mobile wallet world. These merchant-specific apps offer customers the ability to pre-load money on to what is essentially a digital gift card and pay for their purchases by scanning the barcode associated with their account.

Retailers That Use It: Starbucks and Dunkin Donuts

Pros: For daily customers, these apps are a quick and easy way to pay without fumbling through a wallet to find the right gift or rewards card. Users continue to earn associated rewards per purchase, and these apps can even be used at drive-thrus.

Cons: As merchant-specific apps, these payment methods are only accepted at their associated retailers.

Will a Merchant-Specific Payment App Help Me Save Money? By using a retailer-specific payment app, customers are enrolled in loyalty programs and can track earned rewards. These rewards usually entail free drinks and food.

Changes in the Mobile Wallet Landscape

The mobile wallet landscape is still in its infancy, but the establishment of the Merchant Customers Exchange (MCX) — an NFC-based universal mobile smartphone payment network — in August 2012 aims to expand mobile payment options universally. The company is supported by a collaboration of several retail giants (including Walmart, Target, Best Buy, Shell, Sunoco, 7-Eleven, Publix, Darden Restaurants, and CVS among others) who are making efforts to streamline the retail, gas, groceries, and dining mobile wallet experience and make it quicker, easier, and more readily available to customers.

Speaking of NFC technology, iPhone users will continue to be without it; the latest iPhone is not equipped with NFC technology, but it does boast a proprietary savings app called Passbook. And though Passbook doesn't feature mobile wallet capabilities, it can store loyalty cards, transit passes, and coupons that can be easily scanned as needed. What's more, innovators at DeviceFidelity have developed NFC-enabled iPhone cases for previous generations that we hope to see available for the new iPhone 5, too.

And for the Android user whose smartphone isn't yet NFC-capable, chances are that the next generation of most Android phones will be NFC-enabled, as most leading manufacturers have begun to announce their plans for future models.

While mobile wallet tech and software vary, a universal concern for users is the security of their personal information. Developers have implemented a number of precautions and protections to prevent sensitive banking information from falling into the wrong hands: most all mobile wallet apps are password and/or passcode protected.

Readers, do any of you use mobile wallet technology in your daily shopping? Which services do you prefer? Do you feel secure when using them? Sound off in the comments section below.

Front page photo credit: Silicon Angle
Photo credits top to bottom: Media Whiz,
The Next Web, and Starbucks

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