Executives at Bank of America, one of the largest banks in the United States, have launched a pilot that could turn out to be either another step in the evolution of a cashless economy or a total bust.
A New Way to Pay
Bank-installed equipment allows customers to pay for their sandwich or greeting card by waving a small card on their key chain over a blue sensor pad. The test market involves about 10,000 Bank of America employees who eat and shop near work.
QuickWave is not a credit or debit card, so customers don't swipe it through a machine, punch in a PIN number or sign a receipt. It's connected to customers' bank credit cards or debit cards so the charges show up on their monthly bank statement.
"It benefits the customer because it's fast, it's convenient and it's secure," Bank of America spokeswoman Lisa Gagnon said. "They don't have to have cash with them to make a purchase. It helps the merchants because it attracts customers to their stores."
Experts compare QuickWave to the successful Exxon Mobil Speedpass program, which has been around for years and has been expanded. Speedpass customers sign up to link their cards to their credit cards, and use Speedpass to pay for gas and other items at convenience stores.
Zero Liability
As lunch hour wound down Monday at Spratt's Kitchen & Market, General Manager Ron Moran estimated he gets about 30 to 40 customers a day who use the card.
"We put it in to see just how it would work," he said. "It's certainly the wave of the future as soon as they work out some of the kinks."
Merchants said the biggest obstacle appears to be a concern among some bank employees that they might lose their card.
"Some people have told me they are worried about losing the card and not realize it's missing," said Kathy Friese, co-owner of The Bookmark, a bookstore located in Founders Hall in the Bank of America Corporate Center. "They don't know how much money they could be liable for if they misplace it."
The answer is zero, Gagnon said. Just like the bank's other cards, she said, QuickWave offers zero liability for customers who promptly report lost, misplaced or stolen cards.
Friese thought some of her regular customers would use QuickWave to purchase inexpensive items like greeting cards. Instead, she said, customers use it to purchase books that cost as much as $50, and the bookstore averages around five or six QuickWave transactions per day.
Uptake Issues
Bradford Adrian, a senior research analyst with the Gartner Group, a technology-consulting firm, said the concept behind QuickWave is sound enough. The key question is whether consumers will accept it, he said.
"Why hasn't this kind of thing been used in the past?" he said. "One is consumer familiarity and willingness to adopt new mobile payment methods. The time is coming for a more convenient way to make small purchases. Another key is selling it to the merchants. There has to be something in the equation for them."
Adrian sees advantages in the brief time it takes to complete a sale.
"Buying lunch with a debit card is already pretty darn fast," he said. "You can use this card and get the transaction really rolling."
There are other features and safeguards. For one, the card owner can set a daily spending limit on the card or restrict its use to certain shops and restaurants.
And it can come in handy when funds are low.
"If a soccer mom pulls up to a fast-food restaurant with a van full of players, she doesn't have to be concerned if she doesn't have a lot of cash in her wallet," Adrian said.
The pilot program will run through Dec. 31, and the results will determine whether Bank of America will expand it nationally to owners of Bank of America credit cards and debit cards. At that time, merchants would have to pay for the sensor equipment.
One big issue is loyalty, said analyst David Krebs at Venture Development Corp.
"We can't all have five or six cards hanging off our keychains," he said.
In addition, there are still fears about transmitting financial information over wireless connections, he said.
Don Welsh, chief operating officer for Freedompay, the company that designed the technology, said Bank of America is the first bank to grasp the concept and run with it.
"The sweet spot for QuickWave is the under-$20 tickets," he said. "In a high-volume restaurant or store, this product works just great."
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