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Will mobile phones soon replace your credit card?

A pile of credit cards on a wooden table.

Image courtesy Andres Rueda on Flickr.


Ever find your back pocket weighing you down because of your wallet? Would you like to be wallet-free?

NFC (near-field communication) is a “tap to pay” technology seen in mobile devices that can easily exchange information with a single tap. But how secure is this technology at relaying information from device A to device B? Well, Eric Schmidt, CEO of Google, spoke on the topic of the NFC infrastructure for their ‘unannounced device’ at the Web 2.0 Summit last year, which we all know is the Nexus S today. Eric demonstrated during his talk how the NFC technology works on a smart object like the Google placeholder, but also explained that NFC is not a new technology, and that there are many uses for it.

Some of the way that NFC can be used are:

  • Contactless card – make payments with a tap of your phone (like the Mastercard PayPass)
  • Read smart objects – scan RFID tags and bar codes (similar to how QR codes would work)
  • Peer to peer (P2P) mode – transfering information from one device to another within a short range radius

There are many more scenarios that have been tested for this technology to work well in.

As more and more businesses are introduced with NFC technology, the paradigm will be that phones will be the point of transaction for any purchase, whether it be online or offline. Boku’s online payment system called Paymo, allows a customer to place a transaction with their phone number. But would this shift hurt startups like Square, that require an attachment to your phone to process a transaction? Probably not in the short term.

As much as I enjoy collecting points and receiving discounts with various loyalty cards, my wallet just won’t hold them all. Others might think the same way and are thinking of a better solution to carry around their loyalty badges without having to carry around a stack plastic cards in their back pockets.

Do you think NFC in phones is the solution we’ve been long waiting for? Share your comments below.

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