Thursday, January 20, 2011

A New Form of Payment - The Smartphone

Society has gone from the use of bartering, to gold coins, to currency, to debit and credit cards in order to facilitate exchanges.  Is it insensible to think that the new concept of using a smart phone to make a purchase is the future?  I mean who would have ever thought that debit cards would have been as popular as they are today.  And, countries like Japan and South Korea have been using mobile phones for payments for a while.  Omar Green, the director of strategic mobile initiatives at Intuit, a company highly interested in using cell phone purchasing technology believes that 2011 will be the tipping point for this technology.
But, how does it work? It’s called, “Near Field Communication (NFC), which allows two-way wireless communication between a chip inside a phone and a receiving terminal. This means that soon, if you have a phone that supports NFC, you’ll be able to not only pay for a purchase by waving your phone near a contactless reader, but you can also get instant loyalty points, coupons and rewards.” Starbucks is rolling this technology out at all its stores. And, over 13,000 taxis in NYC have been equipped with this technology. As such this technology is already among us.

Some may consider NFC technology farfetched but, let’s consider the number of purchases we make online on our computers.  A smartphone is simply a computer/phone.  The technology in a credit card is not nearly as advanced as the technology that a Smartphone provides so it may even provide more security than a credit card provides.  However, it could create another whole set of issues such as the ability for merchants to track the information of those utilizing the technology. The law makers are currently arguing over the issue of internet privacy, NFC technology would just add to that issue. 

But, if we aren’t already reliant on our Smartphones as they allow us to make phone calls, wake us up in the morning with their alarms, take pictures, browse the web, and provide directions.  They can now make payments for us.  What’s next? Maybe we will be able to get rid of our keys and start our cars with a smartphone.  Come to think about it I may need to make sure there isn’t an app already for that.