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Innovations and Payment Systems

After you yap, try a credit card app

Summary

Back when, your cell phone was just for talking on the go. Now, mobile banking applications let you manage your finances, and include tools for credit cardholders.

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You just use your cell phone to talk? How primitive — and fiscally unsound. Thanks to new applications, or apps, smart phones are also taking on the role of handheld banking terminals, which is good news for credit cardholders. Credit card issuers' financial phone apps

“The best part about apps is that they allow you to manage your money without interrupting your life,” explains Regina Leeds, co-author of “One Year to an Organized Financial Life.” “Just remember that apps are tools and like all tools, they don’t work for you … you have to use them!”

Trend toward mobile banking
The number of mobile payment users reached 73.4 million in 2009 — an increase of more than 70 percent over 2008, according to consulting firm Gartner Inc. By 2012, the number of mobile payment users is expected to top 190 million, more than 3 percent of total mobile users worldwide. Asia/Pacific and Japan are expected to capture the largest share of the market through 2012 where use is estimated to grow to 3.8 percent while use in North America is expected to climb to 3 percent.

Sandy Shen, research director for Gartner Inc., believes it’ll take several years before mobile payments become mainstream, which she defines as being used by at least 20 percent of banking customers.

“Many people have the habit of doing online banking at a set time and place — weekends at home (or lunch hours at their desks) — so they don’t see a strong value in using mobile banking services,” Shen says. “Banks need to offer more than just simply an extension of their online banking to mobile phone customers.”

Shen believes that banks and card issuers should offer consumers different products that cater to their specific needs. Some cardholders might opt to sign up only for text alerts about account changes, while others might download apps that allow them to manage all of their financial transactions from their phone.

“Offerings should also be carrier-agnostic so that all customers can use their bank’s mobile offerings, regardless of which carrier they are with,” she adds.

iPhone apps most plentiful
Currently, iPhone users have access to the greatest number of apps. Options are scant, but on the rise, for users of Blackberries and Androids.

Citi was the first of the big banks to release a mobile banking app that allowed customers to access their statements and balances on-the-go and others soon followed suit. Now, most of the top credit card issuers offer apps for cardholders. There are a few exceptions: As of March 2010, American Express has not released an app for cardholders. You can access stock prices, foreign exchange rates and interest rates through an HSBC app for the iPhone, but the bank doesn’t offer an app aimed at credit cardholders.

Though banks are racing to release apps, their functionality is limited. Most of the available apps are a lot like the credit card issuers themselves — all business with few bells and whistles. Standard features allow you to confirm your available balance before a big client dinner, ensure your favorite online retailer refunded the purchase price of the khaki pants that didn’t fit or double-check your payment due dates to avoid late fees and penalties. There are a few surprises, though.

Banks need to offer more than just simply an extension of their online banking to mobile phone customers.

— Sandy Shen
Gartner Inc. research director

Target doesn’t have an app for users of its Red Card, but the mega retailer does offer a unique app that lets shoppers save their gift card information in their phone using a PIN, enabling them to redeem gift cards in the store using their phones. An app offered to USAA customers includes a rental car locator and an accident checklist that can be used to record the details of an accident to help file an insurance claim. You can even use the app to upload photos and send the claim to an insurance agent.

Security concerns
Like all new technologies, there are concerns about keeping information secure. The good news: Right now, mobile banking is fairly safe.

“At the moment, there aren’t enough financial transactions being conducted over mobile phones so [hackers and thieves] aren’t targeting them,” says Robert Vamosi, security, risk and fraud analyst for California-based Javelin Strategy and Research. “Most apps tap into the browser through the smart phone, which means it’s no different from online banking, it’s just being done through the phone.”

To protect your financial information, Vamosi suggests downloading apps directly from banks and card issuers or a recognized app store, such as iTunes. This is the best practice to avoid “faux apps” — apps that look legit but are potentially malicious.

It’s also a good idea to choose secure passwords, change them on a regular basis and log out after each banking session, according to Leeds.

The other potential downside to the app craze is the increased likelihood of user errors. It’s easier to overlook billing errors while viewing credit card transactions on a super small screen. Paying bills on the go from a tiny keyboard also increases the chance for fat-finger mistakes, such as making a credit card payment of $2,000 instead of a $200. It’s important to do due diligence by checking statements online (or when they arrive in the mail).

The following chart provides an overview of the latest apps from major credit card companies:

MAJOR CREDIT CARD ISSUERS’ CELL PHONE APPLICATIONS
BankAttributesAvailabilityOther features
Wells Fargo MobileUsers can view account balances, recent transactions and payment due dates. App can be accessed using the same username and password used for online banking.iPhoneCardholders are prompted to create an account nickname on sign-in to make it easier to read on the small screen.
Citi MobileThe app allows cardholders to check account balances and available credit, view recent transactions and confirm payment due dates. Uses the same user ID and password as current online accounts.iPhoneUsers with multiple Citibank accounts can make transfers between accounts. The app also includes a GPS to locate Citi branches and ATMs.
Chase MobileUnlike other banks that tweak existing Web interfaces for use with phones, this app was customized for the iPhone. Cardholders can check account balances and view recent purchases. Also allows users to access last statement balance, due date and amount of upcoming payments. Users log in using existing user ID and password for online accounts. Includes a future payment scheduler: Users can set up a payment to their account for a future date.iPhoneCardholders can sign up to receive real-time suspicious transaction alerts via text and place holds on accounts until contact with a fraud representative is made.
Bank of America Mobile BankingCardholders who do not have Bank of America bank accounts can view balances. Cardholders who also have checking and/or savings accounts can view transactions, check balances and make payments.iPhone, Blackberry, AndroidUsing the GPS in the phone, cardholders can search out nearest bank branches and ATM locations. The app uses a visual SiteKey for an added layer of security and advanced encryption technology to protect the online identities of users. Guarantees that cardholders aren’t responsible for unauthorized charges.
Discover MobileIn addition to viewing transactions, checking balances and making payments, this app allows cardholders to track rewards details (depending on the specific card) and enroll in quarterly Cashback Bonus programs.iPhone, Blackberry, AndroidThe “Paydown Planner” shows cardholders how long it’ll take to pay off their balances based on various monthly payments, and the “Purchase Planner” tracks how large purchases will affect monthly credit card bills.
USAAThe app covers all of the basics from viewing transactions and checking balances to monitoring payment due dates and paying the bill.iPhone, AndroidThe new Deposit@Mobile feature lets eligible members deposit checks from their phones — no ATM required. Users submit an image of the front and back of an endorsed check through the phone and the deposit is instantly credited to the account.
Source: CreditCards.com research into major credit issuers’ phone applications in February 2010. To report updates, e-mail editors@creditcards.com. All the applications are free.

See related:MasterCard releases ‘ATM Hunter’ app for iPhone, Trial version of iPhone credit card processing app available, Bad credit customers pay more for Apple iPhones, Mobile payments predicted to skyrocket, Merchants eye mobile phones to transact card payments

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