Improving It

Tuesday, February 22, 2011

Your phone: pay for more (but not in the usual way)

First 4 digits of a credit cardImage via Wikipedia
So you already think that your mobile phone can do everything? There's an app for this, an app for that, we can email photos taken by pinhole-sized phone cameras, and we can all wonder how its possible for an average teen to walk and text simultaneously. So are you ready to pay for more with your phone? And for once I don't mean this the same as 'pay more', I mean pay for more things, as you would get cash out of your pocket to buy a can of Coke from a vending machine.

FloridaToday.com talks about the rise of contactless payment technology (thanks to Bob Wieseneck at Applied-InfoSystems for sending me this story). It seems that this long discussed, and usually ignored function that has been so popular in Japan, and almost completely ignored in the rest of the cell-phone using world might be gaining popularity.

An interesting stat from the article:
The Smart Card Alliance estimates that there are half a million contactless terminals in the U.S., in 150,000 to 200,000 locations. That compares to perhaps 6 million locations in the U.S. with traditional card readers
Many of these terminals are in New York city taxis, which have the contactless NFC chips. This in my opinion is an ideal location for contactless technology. When in a cab I'm more likely to have easy access to my phone, or its already in my hand. I don't need to grope for my wallet in the dark, dropping $20 bills and my house key on the floor, when I can just tap the phone against the reader and I'm done. Better for the driver, better for me. Its the same anywhere I don't want to be troubled or risk taking my wallet out and flashing the cash and cards. I want to buy a Coke from a vending machine on a busy subway station? Tap and go. The same for parking meters. The benefit is not just speed, it is convenience and security as well.

An interesting point comes when you consider, according to the article:
In stores, phones with NFC could be popular if they do more than merely replace a wallet of credit and debit cards. They could help merchants track and reward loyal customers, replacing both loyalty cards and printed coupons.
What is it that allows stores to do this? Well, the stores are a little restricted with what they can do with your credit card number, and what you will allow your credit card to do (if I can buy thousands of dollars of stuff with a card, you guys aren't getting my permission to mess with it!). The technology and security around credit cards limits the information stores can collect and use at the point of sale. After all, its just a number, and your data and preferences are very separate. Outside the US, chip and pin credit cards have shown the security and anti-fraud benefits of getting away from a swiped card number.

With contactless technology, the stores aren't bound by Visa, Mastercard, Amex or the consumer's perception in the same way. If they can get your permission to use your contactless device to act as a loyalty card and payment card in one, then they start to get some interesting applications. It seems that the humble 2-D barcode I've been chasing for tracking consumer preferences could have a run for its money. You may now have an option: scan or tap to find out more about that enticing offer on the shelves of the local retailer?

I'm ready to pay for more with my phone. And maybe this technology will be led by smaller businesses as they upgrade their point of sale equipment a bit at a time. The large corporate retailers may be too slow to catch up given a need for standardization and mass rollouts of new card payment machines. This could mean that the little guy has a better chance of catching this wave of adoption of contactless payment technology by consumers.

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