Cell Phones & Credit Cards Collide

Thanks to improvements in a technology called near-field communications is now making it possible to integrate your cell phone and your credit/debit cards. This new technology is currently being tested in the United States, Germany, the Netherlands and few other countries. Essentially your cell phone will be affiliated with a carrier as well as a bank or credit card issuer.

The advantage of this new technology is that it enables devices to communicate back and forth with each other in a secure environment. This technology uses something called inductive coupling which acts uses the principles as electromagnetism. Two devices that have the NFC chips built into them will be able to communicate. For example, when you make a payment using your NFC enabled cell phone at the Wendy’s drive through several transactions must occur. First, your NFC cell phone will send the NFC enabled cashier system your credit card information like card number and expiration date. The cashier then processes your card information. Next you will have to authorize your transaction using your credit card pin. However, instead entering into the cashiers pin keypad, you will just enter into your cell phone and the phone will communicate with the cashier allowing you to approve the transaction. Then, just like if you were at the keypad, you will receive a message to your NFC enabled cell phone letting you know whether or not you were approved. If you are approved it will be able to keep track of your receipts which you could then upload to a computer or printer.

At the 2007 Consumer Electronics Show, Nokia unveiled its Nokia 6131 NFC enabled cell phone. This phone looks like any other unassuming flip phone; you might buy for $39. The only difference is that this phone comes equipped with NFC technology that will allow you to do things like pay with your credit card or even open your front door. Even some hotels are now using near-field communication technology to grant guests access to their rooms. If you have this capability they will be able to send your phone the access code you need to get in to your room. Once you arrive at your room, you will be able to open the locked door simply by entering a code into your NFC enabled cell phone.

For those worried about security, Nokia, allow you to disable the payment option via customer service. The payment button feature that is integrated with your credit card company can also be turned on and off. If you have the option on, you have the ability to enable a password for protection. You also have the option to disable the password so that you can “express pay”.

Bank of America has announced a test run that will be conducted by its employees. 500 of its workers will be given an NFC enabled phone that they can use at vending machines in the company cafeteria and break areas.

Today there are also credit cards available from Bank of America and Chase offer “express pay” credit cards that are enabled with RFID chips that don’t require you to enter a signature or password. This offers convenience for those who are willing to run around with a “loaded credit card” in their wallet. However, most of us do not like this idea very much. An NFC enabled cell phone will allow people to make safe quick payments. This will increase the amount of people who use a credit or debit card since almost everyone carries a cell phone.