Hidden costs in mobile payments?
Consumers Union, the nonprofit publisher of Consumer Reports magazine, said cardholders should get ready for the fees they will be charged when using mobile phones to make payments at the POS. According to its investigation published in the September 2011 edition of Consumer Reports, whatever costs consumers incur for using bankcards today will continue when they use mobile phones to make payments.
The report, New ways to pay: At the checkout, should you use credit, debit, or cell phone?, said that as new payment options proliferate, banks and technology companies are positioning themselves to capture their shares of the $50 billion a year in fees generated by electronic transactions. "Most of the new electronic payment options are tied to credit and debit cards, so whatever costs consumers incur in using their plastic will transfer to the new methods," the consultancy said. "Paying by mobile phone won't save them money."
According to the report, merchant fees will accompany mobile payments. "Google Wallet merchant transaction fees are the same as those charged on plastic payments, and the same is expected to be true for Visa's digital wallet," the consultancy said. "Square and PayPal Mobile charge merchants even more than the average big bank fee, 2.75 and 2.9 percent of the transaction amount, respectively." But consumer fees will also be part of the equation. The report found that only person-to-person money transfer specialist Obopay Inc. charges consumers a flat 50-cent fee for payments over $10. "You can transfer funds to your Obopay account from a bank account at no cost, but if you link a transaction to a debit or credit card, you'll pay a 1.5 percent fee," the advocacy group said. "So on a $100 payment, fees can run from 50 cents to $2."
The advocacy predicts prepaid debit card accounts on mobile phones will be especially costly for consumers, since the cards can come with activation, monthly maintenance, transaction, balance inquiry and reload fees.
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