Cell Phone Payment: A Cash Machine in your Pocket

By JR Raphael
Contributing Writer, [GAS]

We’ve all been there. You’re waiting in line when suddenly you reach for your back pocket…and realize your wallet isn’t there. Well, good news, fellow geeks: The days of needing cash or even a credit card to pay for purchases are almost behind us. The cell phone is gaining new power in the world of payment and can actually connect you to cash right now – if you know how to make it happen.

Where we’re headed

Let’s start with what’s in the works. A developing technology called NFC, or near field communication, is growing closer to our pockets by the day. NFC lets your cell talk to other receive sites – kind of like BlueTooth, but quicker. With NFC, you can wave your phone in front of a receiver and have a connection within a second. NFC also works in a shorter range – about four inches max – and uses two-way communication, so the connection’s more secure.

As you can imagine, the possibilities with this thing are endless. The hope is that NFC will eventually act as a virtual credit card, letting you simply wave your phone in front of a panel to make a purchase. It’s also being tested for public transportation – hold your phone up to send your fare and board the bus – as well as eventually for identification, storing your official documents to send to anyone in a split second. In the future, NFC could even let your phone act as your car or house key, connecting with a panel on the door to transmit your identification and let you in.

Promising progress

nokia 6212So how far away are we from having this in our hands? Not as far as you’d think. Just this week, Nokia launched a new phone with built-in NFC. The 6212 is being marketed as a “mobile payment device.” And days earlier, Mobile Candy Dish introduced its Blaze Mobile Wallet for AT&T, Sprint, and T-Mobile customers. This bad boy will let you use whatever phone you’ve got to “wave-and-pay” at NFC-ready credit card terminals right now.

“Consumers can make contactless purchases…without having to upgrade their mobile phone,” explains Mobile Candy Dish CEO Michelle Fisher.

The Mobile Candy Dish can also let you access your personal accounts to check balances or transfer money. Most carriers are charging about five bucks a month for the service.

Other recent developments in the world of wallet-free spending:

  • The Bay Area’s BART system is conducting a trial that’ll let riders wave their phones to pay their fare and even pay for meals at selected fast food restaurants. About 230 people are participating.
  • U.S. Bank, Mastercard, and Nokia have launched a mobile payments pilot program in Spokane. Movie theaters and restaurants in the area have signed on to give it a go.
  • SCM Microsystems just released a new USB reader for merchants to set up NFC transactions. The tool, announced a couple weeks ago, lets businesses basically plug-and-play to be ready for you to pay hands-free at cash registers, parking meters, and more.

Some other nations are a few steps ahead, too:

  • Japan’s been widely using instant cell phone payments for almost four years for both purchasing and building access.
  • Austria is more than halfway through a two-year test of NFC at a college campus. Engineers are seeing how smoothly the technology works when offered for access to secured buildings, product payment, or even instant downloads of course materials. About a hundred people are taking part.
  • Bulgaria has already introduced an “SEP,” or Systems for Electronic Payment, that’s being used across the country. The system is being marketed as “the mobile way to pay.”
  • Parts of India are using NFC to let families get their social security pensions and manage their bank accounts.
  • London’s launched a wristband NFC trial at festivals and other events. Organizers hand out the bands to VIPs, who then wave them in front of sensors to get into private areas. They eventually want to move into widespread use of the bands to let concertgoers pay for items and even download songs on the spot.

Text-based transfers

All right, so that’s all fantastic for the future – but there’s still a ways to go before the technology becomes ubiquitous enough to let you leave your wallet behind. In the meantime, though, you can still use your phone to help with your finances, even if it’s not completely hands-free.

I’m talking about a site called Obopay that lets you literally transfer cash via text message. Citibank just signed on to integrate it into its services for checking customers, but anyone can use it. Here’s how it works:

  1. You sign up for an account with them (free) and then add money from your bank account or credit/debit card as you wish.
  2. You can now send cash to anyone with a cell phone through either the Obopay web site or a regular text message. The service only charges you ten cents for any amount you send, and it doesn’t charge anything to the person who’s receiving.
  3. The person who you send money to will get a text message letting them know they got the cash. They’ll have to login once and start an account, but once that’s done, they can configure it so that the cash goes straight into their bank account for all future transfers.

It may not be quite as cool as wave-and-pay, but for families and friends who need to exchange money often (think college students here), this service has a pretty sweet sell, and at almost no cost to the end user. It can also come in handy for small business owners or independent contractors who need to collect payments and fees from clients outside their communities.

All in all, the days of a forgotten wallet meaning a ruined night are numbered. Between services like Obopay and the storm of NFC-based possibilities in the works, the wallet itself may very well soon become a thing of the past – good news for us geeks who would rather use that back pocket to hold our flash drives, anyway.

[Header picture source: Philips]

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