Capital One Pushes Into Mobile Payments With Android App

  • New feature lets Android phone users pay at in-store terminals
  • Banks are the `sleeping giant' in mobile payments: researcher

Capital One Financial Corp. introduced a tap-to-pay mobile-payments service, becoming the first major U.S. bank to offer such functionality in competition with Google Inc.’s Android Pay.

The bank’s updated Capital One Wallet app now lets consumers tap their Android phones on in-store terminals to pay for things ranging from coffee to clothing.

Capital One, a bank that gets more than half of its revenue from credit cards, is following technology heavyweights like Google Inc. and Apple Inc. in the nascent tap-to-pay market. Both Google and Samsung Electronics Co., Ltd. debuted an Android-based mobile-payments service in the U.S. in September.

By developing and marketing their own mobile-payments services, banks could recapture half the market, said Richard Crone, chief executive of researcher Crone Consulting LLC. Mobile payments in the U.S. will reach $142 billion by 2019, up from $52 billion last year, according to Forrester Research Inc.

“It’s a race for enrollment between banks and retailers and new entrants like Google,” Crone said in an interview. “Obviously the new entrants made the first move. The sleeping giant here has been the financial institution.”

Consumers are already comfortable with their banks’ mobile apps. More than 50 percent of smartphone users with bank accounts have done mobile banking in the previous 12 months, a December survey by the Board of Governors of the Federal Reserve System found. And 22 percent have made a payment with their phone in the prior 12 months, an increase from 17 percent in 2013, the survey found.

Capital One’s new app offers various features: It sends users notifications whenever a new charge is made, so consumers can track purchases made with the app as well as with their plastic cards. It can also flag if a tip amount appears suspect, for example. 

“We just think there’s enormous richness here of those kinds of insights we can provide,” Tom Poole, managing vice president of digital payments at Capital One, said in an interview.

The Capital One app has more than 1 million users, he said.

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