How to accept credit cards with your smartphone

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PHOENIX – If you want to pay for things with your smartphone or perhaps accept a credit-card payment from somebody, you guessed it – there’s an app for that.

Starbucks was one of the first companies to launch mobile payments at its stores. If you have a BlackBerry or an iPhone, you can download the Starbucks Card Mobile App for free. Once you have the app, you can manage your account and reload your Starbucks card – all with your smartphone. And when it comes time pay for that tall caramel macchiato and with an extra shot, just wave the barcode that’s part of the app in front of the scanner and you’re all set.

According to Mashable, 3 million people now use their smartphones to pay for their caffeine fix.

Such mobile payments are going to become more and more common, but the technology isn’t just for big multinational companies.

Not only can you use your smartphone to pay for things yourself, you also can use it to accept credits cards so people can pay you -- for pretty much anything.

Ken Colburn of the Data Doctors showed Scott Pasmore how Square works, and it couldn’t be any simpler. Square is a little $10 device that you plug into you iPhone, iPad or Android phone. It works with a free downloadable app. Simply swipe any credit card – Visa, Mastercard, American Express or Discover, and that’s it.

Square is a pay-per-use service so there is no setup fee, no contract, and there are no caps on the number of payments you can accept. The fee is 2.75 percent per swipe. Deposits are made to your bank account daily.

With Square you don’t have to have a merchant account, which can be expensive, nor do you have to worry about security. You never actually take any credit-card numbers yourself. The Square software handles all of the security using industry-standard practices. Square carries the VeriSign Trusted seal, which mean it can and does use encrypted data transmission to secure both your private information and that of the people paying you.

Square can revolutionize the way we pay for things, especiallywhen it comes to traditionally cash-only events like bake sales and yard sales.

“[With Square,] anybody can take a credit card for any kind of transaction,” Colburn said. “Statistically, people who buy with credit cards tend to buy more and more often, so it’s really good for everybody. … It’s the coolest thing ever.”

Square is available at most Apple Stores for $10. You also get a credit for $10 in transactions, essentially making the device free. If you sign up on the Square website, the company will send you a free card reader.

Colburn showed off another mobile-payment service called FaceCash. Like the Starbucks payment system, FaceCash also uses barcodes. The difference is a picture of you is incorporated into the barcode as a security measure.

“It’s a quick way for the merchant to say, ‘OK, you’re really who you say you are,’” Colburn explained.

FaceCash is free to use, but it’s a debit-based system so you will need to make a deposit unless you choose to link your account to a checking or savings account. If you have a free e-mail account, there is $2.99 fee to sign up. You also have to have a government-issued photo ID so FaceCash can verify your identity.

Because FaceCash, which is available for iPhone, Android, and BlackBerry, is such a new app, few people are set up to accept it at this point. Several merchants in the Palo Alto, Calif. Area of implements FaceCash, but the company is hoping to increase its reach soon.

Because the technology behind mobile payments is still developing, there’s no real industry standard yet, but many companies are working on it.

While most smartphones have to be scanned right now, many will have near-field communication capabilities by the end of the year. “You won’t need your wallet anymore because you’ll just be able to go near something, wave [the phone], and approve the purchase. Done,” Colburn said.

While some might be concerned about losing their phone or having it stolen, Colburn said it’s a relatively simple matter to go online and deactivate – much easier than trying to cancel credit cards.

“It actually might be a better way,” he said. “And you only have one thing to lose instead of a wallet full of cards.”