What Disney World teaches us about mobile payments

Recently, I was in Orlando for a conference, and I stayed in a Disney World hotel that offered conference rates. It gave me a chance to test out the new Magic Band that Disney World provides both park guests and hotel guests. The NFC-equipped wristband acts as your room key, park entrance ticket, and debit or credit card for purchases throughout Disney’s central Florida empire.

The Magic Band is a good proxy for the notion of using your smartphone for mobile payments. After all, the first version of this vision, Google Wallet, relied on NFC-equipped smartphones. It also provides insight into the second version of this vision, in which the device communicates over an Internet connection to handle the transaction.

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Wearing a watchlike device was an odd experience, because I haven’t worn a watch since I left time-obsessed CBS in 1984 (an act of rebellious freedom for me at the time that stuck). The usually user-experience-savvy Disney really messed up its terminals by having a tiny keypad for entering the required confirmation PIN; although perfectly sized for Tinkerbell, it is difficult for human beings to use, as the staff noted apologetically when we kept fumbling our entries.

Those issues aside, as a payment system, Magic Band showed why mobile payments don’t have a real future any time soon.

They’re no more convenient than using plastic

It takes no less time to pull out a debit or credit card, swipe it, and enter a PIN as it does to position the Magic Band, hold it until the Mickey Mouse icon on the register glowed green, and enter a PIN. On a smartphone that connects directly to the sales terminal via NFC or Bluetooth, you might save a few seconds pulling out the phone versus digging a card out of your wallet, but you’ll likely lose those seconds in the terminal’s reaction time to the smartphone. If you’re using a mobile app, you’ll spend much more time navigating to, opening, and navigating within the app than you would pulling out a card.

You also wait for the paper receipt. Although your final Disney World bill gives you a list of all your transactions, it doesn’t give you an itemized list like a paper receipt does, so you don’t know what you bought. No doubt that’s why Disney World meticulously gave everyone a paper receipt. And there’s no online transaction history to monitor your spending in lieu of paper receipts. Any business traveler knows you need to have to get your expenses reimbursed, and shoppers know many retailers still need to accept returns.

Keep in mind that Disney World is a completely controlled, well-integrated world; its sales terminals record the specific translation details, so they could show up on the final bill or an online transaction log if Disney wanted to do that. In the outside world, you won’t get that level of detail consistently from merchants. Although your bank’s or credit card provider’s website and mobile app show your total purchase amount for each transaction, they don’t provide the details of what the transaction covers — the payment systems aren’t designed to get that detail from merchants. Again, you’ll need to wait for a paper receipt or provide an email address to get it (then receive endless marketing spam).

It’s hard to work with multiple accounts

A Magic Band is tied to whatever credit card you provided to Disney World, so all charges go to it. In the outside world, we use multiple cards. You probably use both a debit card and a credit card. You may have another one or two cards associated to a household or joint account with your spouse. You may have a corporate credit card. You may have a flexible spending account card for health care.

How do you determine which account the payment comes from? At Disney World, you can’t. The same is true of Google Wallet, as well as Internet-routed payment systems like Square Wallet that is widely used by Starbucks customers.

For you to select the payment account, the terminal has to be able to show all linked accounts, then let you select one. Alternately, you’d need to use a mobile app that lets you do so during the transaction. Pulling the right piece of plastic from your wallet is much faster.

Wireless is not reliable enough

At one Disney World restaurant where I had breakfast, the waitress told me that if I paid via the Magic Band, she’d have to do the transaction away from my table — and I’d need to go with her to enter my PIN. The reason: The Wi-Fi signal required by her portable payment terminal didn’t work reliably in that area. I paid with plastic.

Surprisingly, Disney World has lots of available Wi-Fi in its parks and resorts. In the outside world, most hotels, shopping centers, and restaurants are much spottier in their Wi-Fi coverage. Of course, cellular coverage is also notoriously undependable and situational. For example, my Verizon Wireless signal in Orlando and Atlanta (my previous leg) was highly variable, ranging from 2G to LTE. Those areas are dominated by AT&T, so other cellular networks get the spectrum scraps. In my hometown of San Francisco, Verizon has better (not great) coverage than its competitors, yet the signal quality in a city can vary dramatically, even for the dominant carrier.

Any payment system that requires a live Internet connection is a risky one, because that connection isn’t always available. Merchants need a store-for-later capability, which not all mobile payment services offer. Customers need plastic or cash as a backup, which means the merchant has to support them too.

Loss of battery life means you have no money. My iPhone 4’s battery usually lasts at least 18 hours, unless I talk a lot on it. When I was in Orlando, a 45-minute conference call (which drained my battery faster than usual because of the poor Verizon signal) reduced my available battery life by a good 10 hours; I was out of juice by 3 p.m. That didn’t affect the NFC-equipped Magic Band, but it would have meant I couldn’t use a service like Square Wallet if I happened to have been at the convention center instead when that happened. Again, you need plastic or cash as a backup.

The services are too proprietary

When I was at Disney World, I could use the Magic Band anywhere. But it was just a bracelet when I was at the Orange County Convention Center. I have Square Wallet on my iPhone, but almost no one accepts it outside of Starbucks. Yes, in my home neighborhood in techie San Francisco, some small coffee shops do, as well as a few hair stylists and, oddly, lots of therapists — but no vendors I do business with. I’ve found that to be almost always the case when I travel, too.

Many providers want to be the standard payment service everyone uses — PayPal is the latest — but none is anywhere close. So far, the credit card providers have stayed out of the fray, which opened the door for alternatives on the sales-terminal front end. (The credit card companies get the business on the back end, regardless, which PayPal would love to change. But don’t hold your breath.)

Right now, the mobile payments opportunity is for providers, who all want a cut of the transaction fees. They try to appeal to merchants by offering lower processing fees than for credit card and debit card transactions. Their promise to users is allegedly convenience, but they don’t deliver on that in any broad way. In many aspects, mobile payment is a technology looking for a market.

Sadly, even if there were a market, we need a monopoly for mobile payments to have a chance to work — or an oligarchy as we have with Visa, MasterCard, and American Express for credit processing. We need to solve the other issues I’ve surveyed as well.

It may happen, but at this point, your best mobile payment method is the plastic card you carry in your wallet. At least it’s mobile!

This article, “What Disney World teaches us about mobile payments,” was originally published at InfoWorld.com. Read more of Galen Gruman’s Smart User blog. For the latest business technology news, follow InfoWorld.com on Twitter.