Smart Phones Replacing The Credit Card? Is It Worth It?

Posted: August 9, 2010 in Com 597, Digital Media, Mobile Applications
Tags: , , , , ,

I read an article last week on that wireless moguls AT&T, T-Mobile, and Verizon are working with Visa and Mastercard with plans to replace plastic credit cards with a smart phone (specifically the iPhone). The headline caught my eye, and I couldn’t help but wonder the cliche “what will they think of next?”

The idea of the smart phone replacing a tangible monetary asset is definitely not a new one, but my question is, is it really worth all the effort? I mean how much more convenient is it to be able to scan your cell phone rather than your credit card? I couldn’t help but think of a trip I took to Texas back in April. I was in line to get on my flight and the young techie in front of me proudly took out his iPhone while the rest of us cavemen had printed tickets. I thought, “how neat, and convenient, I want an iPhone.” That was, until it wouldn’t scan. The technology was supposed to be fully compatible with any kind of terminal scanning system, but no matter how many times the clerk tried, the scanner wouldn’t accept the ticket. She finally got frustrated enough to usher him on the plane without the scan, as the rest of us tapped our toes with our reliably scannable tickets.

So when it comes to scannable credit cards I think of the obvious issues: security, dead battery, etc., as well as the usability- how long will it take this technology to become fully adaptable? I already get frustrated enough waiting in line during a price check, I can’t imagine what I’ll feel like when someone goes up to pay for his $300 worth of groceries with a phone scan that doesn’t work. No backup card? Too bad. And if you are carrying a backup card, what’s the point of having the app on the phone?

Within the article I read there was a quote from Kim Eaton of Fast Company that stated that the credit card cell feature could be more secure than plastic. Essentially it would work by utilizing an RFID (radio frequency identification) antenna and chip. This type of technology is already being utilized in some metro and smart bus ticketing systems throughout the world. Basically, the RFID technology¬† would be embedded into the phone, but operate independently of it. According to Eaton it’s “like a radio-based version of the magnetic strip on your credit card.” The difference is, instead of sliding your card through a machine and entering your PIN, you’d drop your phone on an RFID reader, and tap in a PIN.

Eaton claims that using the pin keypad on your phone will be more secure than that provided in the store. In addition, the fact that the system uses GPS means easy tracking for stolen phones. The main theory is that this convenience of having everything you need within the cell phone will only draw appeal for future releases, like the iPhone 5.

While I agree that having everything in your cell phone does have the convenience appeal, I am still skeptical whether it’s doing more good than harm. My main concern is usability, and making sure it works with all systems. Until all vendors are prepared to accept this technology, it will be just another foo foo item for Mac heads to show off. Nonetheless, I do have hope that it will help improve security in the long run. Maybe having my financial resources on my phone will make me take better care of it. I guess we’ll have to wait and see.

  1. […] posts this week: Danielle (replacing the CC); Erika (value of website for promotion); Nicole (Advertising? Really? + AppStore); Sam (economic […]

  2. Interesting topic! I’d be quite surprised to see mobile operators partner with credit card companies to offer this kind of service, especially here in the U.S. On Monday Sam showed me a device that plugs into the head phone jack that can make and accept credit card payments via a mobile app (if I understand it right). It seems much more feasible that device manufactures and credit card companies create a standard plug-in device much like a wireless SD card that could handle this kind of transaction rather than building it into the phone.

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