Is It Time to Leave Your Wallet at Home? Cardless Payment Options

Posted by Andrea Baker on

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More and more apps seem to be designed to encourage consumers to leave their wallets at home and pay with their smartphones. Although these technologies have existed for many years, it was with the introduction of Apple Pay on the iPhone 6 that the market seemed to really take notice.

So how do you pay with your smartphone? Which technology is the best?

Dedicated Payment Apps

Starbucks was one of the first merchants to create an app that functioned almost as a mobile gift card. The customer funded a certain amount into the app, then used the app to pay at the register with a bar code. Several other merchants have now created similar apps.

Starbucks POS application Starbucks easy to use POS app.


  • This technology works with any register that uses a barcode scanner, which involves most brick and mortar locations, and is therefore available to just about anyone using a smartphone.
  • Most merchants offer perks for those who use the app. Dunkin Donuts offered a free drink every time a certain amount of money was spent, for example, while others offered exclusive coupons and deals for app users.


  • The app needs to be regularly funded. Once the money is added to the app, you can't get it back.
  • Not all apps are created equal; some users report experiencing errors or failure to load when they need their app to pay.
  • There's a certain knack to getting the barcode to read, especially if the smartphone screen isn't perfectly clean.

Mobile Wallet Apps

Apple Pay, Android Pay, and Samsung Pay use a technology called Near Field Communication (NFC) to pay at specially equipped card readers. All three apps use your fingerprint to authorize the transaction; Samsung Pay can also work with magnetic card readers.


  • Despite consumer concerns, NFC payments are considered very secure by experts.
  • You don't need to have anything with you other than your phone, which is great for people who need to travel light or don't want to fuss with a wallet.


  • Although Samsung Pay can work with magnetic card readers, those transactions are less secure than NFC payments (although they are still about as secure as actually swiping your card).
  • Technology roll out has been slow. Although Samsung Pay is theoretically accepted anywhere you can swipe a magnetic strip card, some reports are that you have to hold the phone at a particular angle to get it to work, which can be frustrating.
  • NFC technology is only available on the new and high end smartphones at the moment.
Apple Pay Tablet POS Stands Apple and Android pay is here to stay.

Options for Merchants

For several years, there have been options available for small merchants who want to accept credit card payments without needing to worry about card security laws or manage an expensive program. Card swipe readers can be obtained through Paypal (Paypal Here) or Square and plug into most smartphones and allow merchants at craft fairs, conventions, and small pop-ups to accept credit cards.

With the new smart chip cards being rolled out in the United States, merchants now have the option of upgrading to a reader that will accept the smart chip cards.

What's the difference between the two most popular card readers for small merchants?

Upfront Cost

Both Square and Paypal Here offer merchants the choice of using a mag swipe reader for all credit card transactions - which shifts fraud liability to the merchant, rather than the bank, if they swipe a chip enabled card - or paying more to get an NFC reader that can also accept chip cards.

Square offers merchants the mag swipe reader for free and upgrades them to the NFC reader for a one-time $49 fee. You should also consider getting a small tablet kiosk and use it as your POS system.

Merchants who set up with Paypal Here also get their first mag swipe reader free, but the NFC/chip card reader costs $149. If the merchant processes $3,000 on the reader in the first three months, $100 is refunded to their account.

Processing Fees

Processing fees are slightly higher at Square; 2.75% of the payment goes to Square, while 2.7% goes to Paypal. Payments process to your Paypal account almost immediately, and can then be transferred to your bank account, or used as Paypal funds. Square takes 1-2 business days to transfer to your associated bank account.

From the Customer Point of View

Both Square and Paypal Here are considered very safe and secure payment methods, so swiping your cards with small merchants should be fine.

PayPal here POS System PayPal here is easy to use and setup.

Can You Leave Your Wallet at Home Yet?

We are probably a few years away from throwing out our wallets entirely, but the truth is that we're getting closer, whether we like it or not. As broadband technology continues to reach rural areas of the country and more companies get chip card and NFC readers, more and more people are likely to pay for transactions with their smartphones.

Bring your wallet with you - but you probably won't need to for much longer.

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