Cell Phone Credit: A New Way to Pay

In the not-too-distant future, a wave of your mobile phone may be all it takes to pay for purchases. The idea seems so simple, so brilliant. We already use our cell phones as cameras, internet browsers, and a host of other handy gadgets…why can’t they act as credit cards, too?

Think about it: Your cell phone could store several different virtual cards. With the push of a button, you select the card you want to use and then wave your phone in front of a scanner to complete your transaction.

The technology is called "Near Field Communication" or N.F.C. It works by waving a device embedded with the technology near an electronic reader that recognizes it. Cell phones with N.F.C. technology are already widely used in Japan to pay for tickets at train stations, groceries, and snacks from vending machines.

But here in the US, it’s a little more complicated. The technology certainly exists--look at Visa’s payWave or MasterCard’s PayPass--but it has yet to be embedded in cell phones. The cell phone carriers, manufacturers, and financial institutions can’t quite figure out product-development and revenue-sharing logistics. They all want a piece of the pie, but don't know exactly how to slice it.

Others argue that a cell phone is too easily lost or stolen to be used as a payment device. But I would say this is no truer of a cell phone than of a wallet full of credit cards. If your phone does disappear, you’d simply need to contact your banks and disable your credit card accounts.

People ultimately enjoy using the technology, according to a survey by the Wi-mobile research group. It's simple and convenient. Like TiVo and social networking websites, a cell phone embedded with N.F.C. is likely to become a technology we didn’t think we would love, but quickly find we can’t live without.

Photo courtesy of VivoTech, a leader in N.F.C. payment system and mobile phone technology.