TECHNOLOGY FOR CHANGE

Will Your Mobile Phone Replace Your Wallet?

R. Colin Johnson | Date: 01-20-10 | Comments

Electronic wallets (eWallets) may make obsolete both cash and credit cards as banks and mobile network operators prepare to unveil near-field communications (NFC) technologies this year. By this time next year, NFC-enabled smartphones will be widely available to act as eWallets that can make point-of-sale payments worldwide.

Electronic wallets (eWallets) may render obsolete both cash and credit cards as banks and mobile network operators prepare to unveil near-field communications (NFC) technologies this year. By this time next year, NFC-enabled smartphones will be widely available to act as eWallets that can make point-of-sale payments worldwide.

Electronic wallet capabilities are based on near-field communication (NFC) technologies, which only authorize bank transfers from the user's account to a vendor when performed at the point-of-sale, as opposed to traditional bank transfers which are independent of location.

In Japan, people can already use their NFC-enabled smartphones to authorize bank transfers that pay for transit tickets, meals and even snacks from vending machines. Likewise, in Africa NFC-enabled smartphones can be used to "hold" and "transfer" cash between people in locations too remote for traditional banks. Kenya's M-Pesa service, for instance, has over six million users.

The infrastructure for NFC in the rest of the world is being put into place during 2010, according to a recent research report entitled:

NFC: The Road to Commercial Deployment. The report claims that banks and mobile network operators are readying worldwide deployment of electronic wallets first in the UK, France, United Arab Emirates, Singapore, Taiwan and Korea, followed by the US, Canada, Spain,

Germany, Italy, Norway, the Czech Republic, Romania and Australia.

"Actions taken in 2010 will be key to deciding which mobile network operators, which banks, which industry suppliers, and which service providers become the leaders in the field," said author Sarah Clark in the report.

Future e-wallet transactions will work by bringing your NFC-enabled mobile phone into contact with a smart invoice or product label that has an embedded RFID tag. In restaurants, for instance, the user will merely bring their phone into contact with the bill, then presses the "pay" button on their phone. Users will also be able to make cash-like payments to each other, by merely keying in an amount, then touching two NFC-enabled phones together and pressing "pay."

Besides replacing cash and credit cards, the new security conscious NFC-enabled phones will be capable of other paperless authentication tasks, including railway travel passes, airline boarding cards, hotel room keys and eventually even passports, according to the report.

Many other more trivial transactions will also be handled by future NFC-enabled mobile phones, according to the report, such as collecting money from a coupon by touching it, downloading a trailer for a new movie by touching its poster, accessing travel information from its brochure, or surfing to a product's web-site to compare prices or read customer reviews.

Right now banks and mobile network operators in every major country worldwide are competing with startup companies dedicated to managing NFC transactions, with no clear indication as yet regarding which of the many services will become available first.