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.



  1. You make a good point about the privacy concerns. Unfortunately, as long as there is money to be made, thieves will find a way to take it from unwary consumers.

    This makes me think of how many iPhone apps have been discovered to be sending user data back to the creator of the app. Government regulation to prevent apps from sending payment data might be required to make payment by smartphone safe for consumers.

  2. Its funny you mentioned starting your car with smartphones. According to, that technology is possible and a form of it will be available soon. The final product of that would be to integrate "push to start" engine technology onto smartphones. "Push to start" works because the car can sense when the key is around it, which allows the button to be pressed and turn on the car. If this technology could be put into smartphones, there would be no need for car keys. While there isn't an app for that already, there could be very soon.


  3. Definitely this is a step forward in commerce and it will bring benefits to both consumers and retailers. Customers will rely on a more confortable way of paying and retailers will possibly benefit on a lower fee charged for the transaction. As you claim, another whole set of issues will arise in areas such as security. So, huge problems that nowadays impact transactions with credit cards, such as identity theft, will not be solved by shifting to a new technology. I think that this technology will seriously affect the dominion of major credit card companies over payment transactions. Surely, it is an advance that is here to stay.

  4. My biggest concern is the privacy issue here. If all our transactions will be made via smartphones, the amount of information that it will carry will be enourmous, making it very attractive. Besides I think that losing or damaging a phone is more common than losing a credit card.

  5. There is great use of near field communication and it can definitely be expanded to even turn on your car! Some issues of course is, what is going to happen if your phone gets lost or stolen? Before, it's just loosing your phone and a few pictures, but now, its not just a few pictures, its your credit card information, your car keys, and anything else that might be included in your phone. It puts more emphasis on your smart phone and the value will skyrocket if lost or stolen. Although i have to say, if there is a way to automatically back up your data somewhere when you put the phone to charge, that could be a protection from lost or stolen phones. Nonetheless its an exciting and fun future for technology, and its exhilarating for all of us to be in the middle of it all!

  6. I think it is inevitable for payment by smartphone to take over as the prefer method of payment. More users and easier access coupled with tighter security on the phones is a winning combination. The technology will take a little time to grow but it will happen.