Smart Phones Are Slated To Replace Credit Cards And Cash - Will Wallets Become Obsolete?

Posted by: Lesley Broff on January 24, 2011 at 11:17AM
	Tweet

Who Needs a Credit Card When You have a Smartphone?

Smartphones can serve as personal computers, e-readers, and now they may even replace those small plastic cards in our wallets that have become all too familiar.

New Google Phones Using Near Field Communication Technology

Earlier this month, Google presented a prototype Android phone that contains a special chip allowing customers to pay simply by waving their phone near a register. This technology, called NFC or near-field communication, uses short-range radio signals to send your credit card or bank information directly to the register, cutting out the need for swiping a card or signing a receipt.

Many locations have incorporated contact-less payments - meaning you can swipe your credit card and the purchase goes through automatically. Gas stations and convenience stores have offered this for some time. Smart phones, however, are capable of more than digital receipts and faster service at the register. They allow for two-way communication giving the buyer valuable information as well as the seller. Smart phones will have the capability of offering automatic coupons specifically targeted to an individual consumer. Loyalty programs, such as supermarket and pharmacy discount cards, can be stored on a phone eliminating the need to keep track of all that pesky plastic. Current trends indicate that consumers will transition smoothly to this next level of virtual currency. Consumers gravitate toward the ease of paperless/cardless money systems as seen by the immense popularity of digital purchasing giants like Paypal and banking bill pay services.

The ISIS Mobile Payment Network

In November of this year, AT&T Mobility, Verizon Wireless, and T-Mobile announced ISIS; a national mobile payment network using NFC technology designed to help customers use their cell phones to purchase merchandise. The companies assured users that the system has strong security and privacy protection and is expected to come into use in 18 months. It is estimated that by 2014 one in six mobile phone users will have a phone with the ability to make mobile payments.

ISIS already has backing by two major financial players. Discover Financial Services is going to be working with them to develop the overall infrastructure for the mobile payment network. Meanwhile, Barclaycard US signed on as the first credit issuer on the network. Michael Abbott, the former GE Capital executive has been appointed the ISIS CEO.

GoPayment is one of the Earlier Forms of Cashless Services

There are already mobile cashless services for small businesses, such as Intuit’s GoPayment service, which has been around for two years now. The company even made a credit card reader that can attach to an iPhone for about $180, which is more secure than simply entering the credit card number into the program for purchases. This is only a few steps away from the wireless, automated system proposed by NFC systems. In the future, these two systems could work hand in hand.

There are definite benefits to a cashless system. It would eliminate the use of counterfeit money, though inevitably there will be those working to hack the system. Lost or stolen phones will be much harder to use than a credit card as password protection and encryption would keep your data a tad safer. Apart from the obvious human weakness of overspending and bad budgeting, the only major downside is a total system shut down or a computer error interrupting transactions. Which will undoubtedly happen during that quick fill up at the gas station just to make it home. (maybe a little stash of cash wouldn't be such a bad idea)

Another start-up, Bling, Has Much Promise in the Furture of Cashless Payments

Another company, Bling Nation out of Palo Alto, California, offers a small Bling chip that customers can attach to their phone and swipe for purchases. Swiping automatically taps the purchaser’s Paypal account. There is an advantage in this system for the retailers - the fee Bling charges is smaller than the credit card companies charge by about half. Also, Bling has worked with Facebook to offer special discounts to Facebook members.

The new Google phone, ISIS, Bling, and GoPayment are some of the exciting new developments in the process to digitalize your wallet. In the near future you will be able to leave home with only your phones and have everything you need to make purchases and receive discounts. The process to get rid of cash and credit cards has been going on for a while, but only recently have we had the technology to make this idea a reality.