Credit cards are so last decade. The new hotness in ultra-convenient payments is powered by near field communications, or NFC, chips.
The idea is simple: Swipe your phone at a retailer's checkout station, tap a button on your screen to authorize the payment, then leave the store as a proper, paying customer. Behind the scenes, the NFC system double-checked your identity, sent your preferred payment credentials to the store's computers, and handed the actual payment process off to either your bank or your favorite credit card issuer.
You're simply moving the functionality of a quick-swipe credit card into your phone, removing one more item from your leather wallet to empower its digital cousin.
This stuff has been around for some time, but in purely experimental ways. Nokia
So, what's new?
All that is changing now. A domestic NFC payments system is set to go nuclear after building up to critical mass. Google just announced a nationwide launch of its new Google Wallet system, which puts the financial know-how of Citibank
Most of the launch-ready merchants are found in San Francisco and New York, but Google's partner locator already shows a few compatible businesses in my Floridian neck of the woods. Outlets already sporting those handy little PayPass readers for chip-girded MasterCards stand a greater chance of showing up, because that's what your phone would talk to.
So it's still kind of limited. To use this stuff at launch, you need the right kind of MasterCard issued by Citibank and nobody else. That Nexus S reference model is still the only Android phone to carry NFC chips, and you'd need the Sprint model to boot rather than its siblings offered by other networks. That's a lot of boxes to check just to qualify for Google Wallet payments.
These constraints should disappear eventually as NFC chips become more mainstream while other banks and credit card issuers join the bandwagon. So far, we're just looking at a very public proof of concept.
But wait -- there's more!
Google Wallet actually goes a little bit beyond a pure payment service. The in-store connection will also send some data the other way, potentially pumping your phone full of digital coupons, ads, and other offers. Your digital wallet would also hold commonly used store loyalty cards, store digital receipts for everything you buy, and in due time also save some trees by handling boarding passes at the airport, theater tickets, and whatever else for which you'd usually receive a hard-copy printout.
Again, none of this is exactly new -- advertising firms have been working on location-based mobile ads since at least 2006, for example. TIBCO Software
Google's solution stands alone right now, but others will undoubtedly join the fray in short order. Like I said, Nokia already has this NFC idea in play across the globe -- we're just waiting for a compatible American network.
Winners and losers
Rumor has it that the next iPhone might gain NFC powers, which would undoubtedly bring MasterCard archrival Visa
The one surefire winner in the NFC revolution is chip designer NXP Semiconductors
I have seen the future, and it's comfortingly familiar. Just leave your cash in that cigar box under the petunias.
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