Hy-Vee customers soon may pay with smartphones

Cash, plastic or smartphone?

Shoppers at West Des Moines-based Hy-Vee and many other retailers may someday soon be able to pay for their groceries, prescription drugs, craft supplies or restaurant tab using their smartphones.

A group of large national retailers, including 7-Eleven, Best Buy, CVS and Walmart, on Wednesday said they were forminga payment  network, Merchant Customer Exchange, to enter the fledgling mobile wallet market. Fourteen companies, representing a combined $1 trillion in annual sales, have agreed to help develop the system and more are expected to join the alliance.

Hy-Vee will be one of the participating retailers, along with Darden (which operates Olive Garden, LongHorn Steakhouse and Red Lobster), Lowe's, Michaels, Sears, Shell, Target and others with locations in Iowa.

The companies released few details about how their mobile payments will work and did not say when the technology is expected to  become available. They said the payment application will be available for virtually any smartphone and it will use secure technology to process transactions.

"We believe that merchants are in the best position to deliver mobile payments to billions of people,” said Michael Cook, vice president and assistant treasurer at Walmart.

Wednesday's announcement came a week after Starbucks said it was partnering with Square, a startup company that lets customers make purchases using their smartphones. Merchant Customer Exchange, Square and other startups are expected to vie with such tech giants as Google and Microsoft as well as cellphone carriers and credit card companies for a chunk of the mobile wallet market.

Dwolla, a Des Moines mobile payment startup company, offers real-time transfer of money from a customer's bank account to merchants who sign up using its FiSync network. They also can use the Dwolla website, via online, mobile phone or tablet browser, to send money through Dwolla's app or online services to Facebook and Twitter accounts, or by email or SMS message.

Hy-Vee's acceptance of smartphone transactions would be another electronic payment first for an Iowa retailer.

In 1981, Dahl's Food in Des Moines was the site of the world's first grocery purchase using a debit. Proving successful, all stores were equipped with point-of-sale terminals by 1983.

HyVee also began equipping its stores with point-of-sale terminals in 1983. The companies were cited in news articles and national trade publications for their pioneering foray into debit card payments.