Google Pay, Fidelity Elan Visa - how's that win-win?

[sengsational]

I got an email from "Fidelity Investments Credit Card" (Elan Visa) that was urging me to use Google Pay, Apple Pay or Samsung Pay. I guess the benefit to the credit card issuer is a more secure transaction?

My limited research took me to https://www.early-retirement.org/forums/f28/apple-pay-finally-102362.html , where I learned that if you enroll a card in one of the "*Pay" apps, then using it acts exactly as if you used the physical card (get the rewards points, shows the same on the CC statement, all the same as if you used the physical card).

So what's in it for Google or Apple or Samsung? It can't be the "holy grail" of getting the leeching credit card companies out of the middle of things (yeah, it's all "free", and they give us "free money" with the rewards, but we're all paying higher prices for it). Of course this won't work unless some more efficient payment method gives even more cash back than the credit cards are giving. But I digress.

With respect to downloading Google Pay and enrolling my Elan card, I'm not convinced it's worth it. I don't mind putting my card into the machine, and in fact, these days, I don't bring my phone into the store (harder to clean than the card is). And "yet another app" on my phone that probably won't get hacked, but it's a juicy target, so I wouldn't be surprised if some day one of these apps need an emergency update.

One attribute that would be worth it is to use it overseas to avoid having to sign or type a pin or to use in a kiosk. THAT would be valuable, but I'm not signing up for Google Pay now in order to make overseas travel easier now, for obvious reasons.

So I've gone on many more tangents that I intended to here. Primarily interested in the motivation of the app providers business model. Maybe the leeching CC middle men are throwing the app providers some scraps?

 

[braumeister]

I love Apple Pay, and I use it for nearly everything when traveling overseas. I have three different cards on it, so I can switch to the one I want at the point of sale.

As for the transaction, my understanding is that when you use Apple Pay (or one of the others), they get a cut of the transaction fee in addition to the card issuer. So that would be their motivation.

 

[foxfirev5]

I use my Fido Visa for about 90% of my transactions. No way I would complicate things with an app. Anyway as a security hawk I still use a flip phone with DW on the smartphone with no access to financial matters.

Also, since I use the Fido card for everything from purchases to regularly scheduled bills any breach is a PIA. Every year or so I had fraudulent charges and had to get a new card and change all the billing. Once I quit using the card at restaurants the problem went away.

 

[Alex The Great]

I use Apple Pay all the time, with a few credit cards. Some of them has 2% cash back like Fidelity. The reason I prefer Apple Pay over physical credit card, is enhanced security. Unlike credit card, there is no way payment terminal in store can figure out your credit card credentials. Credentials are transmitted as a secure code. I typically use Apple watch rather than smartphone, because it is more convenient. I do have Apple watch series 1 which seem ancient these days, but it works fine and even still getting updates via iPhone 6 plus which is also pretty old.

 

[misanman]

I use Google Pay and the Fidelity Visa is the default card. I just wish more vendors would get on board with accepting it.

 

[BigMoneyJim]

I'm presuming security. I've read my card, expiration date, name, etc. out over the phone twice this week .

Ok, Goopplesung Pay won't solve that particular problem, but LOTS of point-of-sale systems are still using the swiped card which is far less secure than the chip. It's kind of frustrating that all this new iPad-based and other mobile-based POS systems only have a swiper and not a chip reader.

Gas station pumps especially, and I'm pretty sure I've had my card info stolen twice that way.

But lots of new tech works fine with touchless pay, even a lot of gas pumps now.

The Gooplesung Pay is similar to the chip in that it's a challenge/response system that can't just be lifted & reused elsewhere. So I must imagine that's why.

It may also be that they are losing market share to Gooplesung Pay connected to bank accounts, or maybe Venmo, PayPal, and other such apps and trying to get 'the kids' to use their CC for that sweet merchant fee.

 

[FIYes]

I use Samsung Pay for most transactions when I am out shopping. It is very easy and I appreciate that it uses a fingerprint or pin to validate the transaction.

 

[jazz4cash]

I think you mis-read the email. It’s from Elan so why would you think Apple or Google is pushing it? I got the email even though I already use Apple Pay with my Fido Visa. I thought Elan was just promoting another way to use the card by adding it to whatever mobile pay app you prefer. In the current environment of contactless transactions I’m using mobile pay as much as possible. I really like it.

 

[walkinwood]

My guess at the value for the payment app provider (not having read the licensing agreements)



Now Google & Apple know where you are using the card and how much you're spending. They know how much you are returning to the store. That is valuable information that they can monetize.


Down the road, if they capture the a big percentage of users, they can dictate terms to the credit card companies (See what Amazon has done to publishers) or even introduce a competing payment system (like netflix creating their own content)

 

[BigMoneyJim]

Now Google & Apple know where you are using the card and how much you're spending. They know how much you are returning to the store. That is valuable information that they can monetize.

That's a good point. This didn't happen when I put my credit union Visa into Google & Apple Pay, but I recently put my Amex in both, and now my iPad pops up alerts whenever stuff is charged to my Amex *from anywhere*. I've never even used Apple Pay, just added the card just in case, but it knows when my Internet bill is paid, for example.

When I saw that I wasn't sure how to feel about it. I still don't. It's creepy, but I guess it will be nice if I see an unexpected charge show up. On the other hand, the credit card companies seem to be aces at figuring out what wasn't me, and call me to verify right away.

(I pay my cards off in full monthly, automatically.)

 

[The Cosmic Avenger]

NFC payment apps use one-time CC numbers, plus they completely remove the threat of magnetic stripe skimmers, so they are actually more secure than using your card. I also like the fact that it's contactless, especially now. And mine requires my fingerprint to work, and it won't work while the phone is locked (and it's ALWAYS locked when I'm not actively using it), so I do not worry about security with Google Pay on my phone.

If you sign up for it now but don't use it, Google/Apple/Samsung won't have access to any transaction data done the old-fashioned way.

 

[Aerides]

Yes, apple/google and the CC are sharing the profits. Apple/google have convinced the CC that people will use their card more if they can use it easier and more securely. And the CC's know that customers tend to load one card into their apple/google and just use that forever.

So, the CC has to push you because they want to be that ONE. Elan knows if they don't push you, Amex will, and they want to win over amex.

It's one thing to take out you wallet, see 4 cards and pick one, it's entirely another just to wave your phone... you can change cards in the app, but who is gonna bother.

The old way was fighting for share of wallet, to be the card you pulled out most often. Now it's to be the default card in your apps.

 

[sengsational]

^ That's probably it...to be the default, the CC company is willing to give up a slice. And the slice can be small because the app provider gets value from snooping.


Replay attacks are mitigated by chip technology, so apps don't add value there.



I'm not going for it.

 

[steelyman]

I pay attention to which card offers extra cash back on a service (especially Discover which switches 5% cash back quarterly) and select that card in Apple Wallet. Seems easy enough.

NFC support is one of the things I really appreciate from buying a more recent iPhone. I use contactless pay as much as possible now.

 

[sengsational]

NFC support is one of the things I really appreciate from buying a more recent iPhone. I use contactless pay as much as possible now.

I get that it's convenient, but I see it as a higher risk of disease transmission.

After being in the store a while, I presume my hands are contaminated. I take out my phone to unlock it so that the NFC pay thing works. Now my phone needs cleaning.

Alternatively, I leave the phone in the car, and just bring the card I plan to use. At checkout, I pull out the card, which now needs cleaning, but it's easier to clean a card than a phone.

 

[gromit]

I get that it's convenient, but I see it as a higher risk of disease transmission.

After being in the store a while, I presume my hands are contaminated. I take out my phone to unlock it so that the NFC pay thing works. Now my phone needs cleaning.

Alternatively, I leave the phone in the car, and just bring the card I plan to use. At checkout, I pull out the card, which now needs cleaning, but it's easier to clean a card than a phone.

I agree. My current strategy is to not go into stores at all right now. I only do online ordered curbside pickups. However, in a post-vaccine world I think I might be interested in Google Pay if its widely accepted by the big box retailers.


To the OP: Thanks for this thread. I also received the same email.

 

[braumeister]

I take out my phone to unlock it so that the NFC pay thing works. Now my phone needs cleaning.

At the risk of sounding like a commercial, that's a nice feature of the Apple Watch. I leave my phone in my pocket and just hold my watch near the terminal.

 

[jazz4cash]

I guess many folks just load one card into their mobile pay app but I have three. I pick the one with the best rebate or if all else is equal I take the one with the best float. Since I started paying attention I’m starting to automatically reach for my phone instead of my wallet and I’m surprised/annoyed if a card or merchant doesn’t support Apple Pay.

 

[jazz4cash]

How much is the skim that is being divvied up among apple/google/Samsung, VISA, and the user? If my share is ~2% what’s left for the other parties?

 

[braumeister]

How much is the skim that is being divvied up among apple/google/Samsung, VISA, and the user? If my share is ~2% what’s left for the other parties?

Here's a pretty good explanation:
Average Credit Card Processing Fees and Costs in 2020

 

[OldShooter]

I looked at the Google Pay videos. When I got to the point of learning that someone in possession of my unlocked phone could email any amount of money to any address they chose I stopped watching. That kind of convenience I don't need.

 

[H2ODude]

Big fan of the Fido 2% back on everything. Got ours compromised in January, so I've gotten not only a replacement but a second. The second is for recurring stuff so if the other is compromised I don't have to change. I also have scratched off the code on back of card (memorized). Now I'm pretty sure if someone gets the numbers of the card sans code they can't do a "card not present" transaction. Could be wrong on that last one, but pretty sure it will cut out what happened to us; waitress got the numbers, and code, and went shopping.

 

[Alex The Great]

While I agree 2% cash back on everything is nice, I'm not sure what is so special about Elan/Fido card? There plenty of others out there. For example, I do have Citi double points and PenFed Power which both has 2% cash back on everything. Also, all PenFed cards come with no FTF which is advantage when you use it internationally. Finally, Apple has its own card (actually issued by Goldman Sachs) which also return 2% cash back when you use it with Apple Pay.

 

[jazz4cash]

While I agree 2% cash back on everything is nice, I'm not sure what is so special about Elan/Fido card? There plenty of others out there. For example, I do have Citi double points and PenFed Power which both has 2% cash back on everything. Also, all PenFed cards come with no FTF which is advantage when you use it internationally. Finally, Apple has its own card (actually issued by Goldman Sachs) which also return 2% cash back when you use it with Apple Pay.

It’s just easier if you have other Fido accounts.
I am a big fan of Fido/Elan also but I don’t think anyone is saying it’s way better than any other. The key to me is cash monthly automatic cash rebate with no categories. It has very long float period and customer service is great so far. I had insufficient funds one month because I typo’d the payment account number and Elan didn’t impose any penalties, charge interest, or withhold cashback.

 

[5Miler]

I must be behind the curve here as I just received an email from my bank (Bank of America) offering an updated Visa to allow contactless transactions. Although I am a user of Applepay with several cards loaded, I was not aware of the technology to allow the same functionality using just my credit card. I Must Have It.