Credit Cards May be Replaced by Smartphones
Do you remember when PayPass for credit cards was new? Before that technology becomes the standard it may be bypassed by some big players in the cell phone world.
AT&T and Verizon want you to get rid of your wallet. Bloomberg reports that AT&T and Verizon Wireless are rolling out new software that will allow you to use your smartphone to pay for purchases. They will be teaming with Discover, currently the fourth largest credit card company in the U.S. Barclay’s of London will be helping process the payments.
The new process will be based on systems already in use in parts of Europe. Using an in-store contact-free scanner, shoppers could pay for their purchases with a swipe of their phone.
It’s been a long time since the coolest thing your cell phone could do was let you play solitaire. Now you can use your phone for music, television, checking your e-mail, and even to pay bills online.
The companies involved hope their technology will become commonplace and a rival to Visa and Mastercard’s massive payment networks.
However, there are a few hurdles that must be cleared before smartphones completely replace credit cards.
First, there’s the equipment cost. Each scanner will cost about $200 for merchants and consumers will need to pay $10-15 to have a special chip installed in their phones.
The cost is a bit prohibitive unless merchants and consumers know that they will be using it – and considering free credit card payment options are widely available. And merchants will be unlikely to install the scanners if there aren’t enough people using their smartphones to make purchases.
The Indianapolis Examiner points out, though, that the technology may not be more secure than your traditional plastic card. Just like a card can be stolen, so can the RFID data that would have to be embedded in the device. If your RFID data does get stolen, someone can clean out your accounts pretty fast.
And, of course, there is a more humble question: Could this ease of access make it that much easier to get deeply into credit card debt.
After all, the technology is being built so that eventually every phone can carry multiple accounts. Seeing the number of cards you have makes the debt you’re in more realistic. This futuristic technology could give consumers a false sense of security as to the amount of money they’re actually spending. Would this cause more people to file Chapter 7 bankruptcy?
Regardless, the new smartphone technology should be rolled out soon in Atlanta and three other U.S. cities as a trial run. If all goes well, the program will be expanded nationwide.
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