Will smart phones replace your wallet?

     Just recently Bank of America and Visa started testing contact-less payments through mobile phones. Customers who install this on their phones can simply wave the phone above a sensor rather than swiping a credit card through the register. Similar services already exist in Japan, Turkey and the UK.

     Mark Siegel, a spokesman from AT&T, was quoted saying that mobile payment are the logical next step for consumers, which sounds right to me, but just like people are still writing checks and paying cash in a world where credit and debit card are so popular, I doubt that this technology will hurt the credit and debit care companies.

     This article is talking about reaching a tipping point with the younger consumers and claims that almost 80% of the 18-34 years old will use mobile financial services within five years. There is a rapid growth of consumers using their smart phones to manage many aspects of their lives already; the financial piece of the puzzle is the next “hot trend”. 

   
    I’m not sure if we are really “there” yet, although smart phones are on the rise we still need the merchants to be able to work with those new features and that may take a little longer to sink in and the author of this article tends to agree with me.  It is a circle that we have to find a way to beat before we can win this battle – the consumers will not download these apps until they know that enough merchants will accept this type of payment, but merchants will not implement this technology until there are enough consumers who will justify the cost of implementation which is estimated at $200 per reader.

     The growth potential for this kind of technology is great. We can extend this type of payment to create a Mobile Ticketing system for public transpiration starting with bus and trains and maybe in the future replacing electronic airline ticket, concert tickets or even hotel room keys. The technology has been around since late 2003, but it is not widespread yet as phone manufacturers are not shipping their phones with the build in technology. Only earlier this year Nokia announced they will have this feature as standard option in the 2011 phones so maybe we get closer to adopting this new technology in the near future when more phone manufacturers will follow.