Want to make a payment? Wave your phone.

09 Sep 2010|Added Value

The future is finally here.  Starting this month, New Yorkers will be able to pay for their cup of coffee by simply waving their smart phone in front of a reader: no credit card or cash required. Bank of America is working with Visa to test using smart phones for store purchases in New York. Read the full story here.

Although this card-less and cash-free vision of the future has been part of many forward-looking future scenarios in the US, Japan and other places in Asia and Europe have already been living this future for some years.

The Bank of America and Visa test-case leverages Near Field Communication (NFC) technology that is widely used in Japan and there are several test-cases underway across the world. Here is a description of NFC

As a technology researcher, I have been hearing about the promise of NFC technology for a long time and it is great to see it become a reality in the US. One of the reasons that NFC has been slow to take off in the US is that the technology has to be built into the phone  which presents technical and adoption challenges.  Phone manufacturers and financial companies have not yet worked together to make it a scalable and attractive option for customers. In addition, many people are reluctant to upgrade or buy a new phone only for ease of payment.

An innovative work around to built-in NFC technology uses NFC stickers to turn any phone into a transaction hub. Palo Alto based start-up Bling Nation has partnered with PayPal to push its Bling tag, an NFC enabled sticker that can be stuck on the back of any phone. Currently, Bling stickers are only available to customers of participating banks.

According to the popular tech blog, ReadWriteWeb, next generation iPhones might have NFC technology built into them allowing for the phone to be used for payment.

Having an iPhone with built-in NFC technology could prove to be a game changer and lead to the wider adoption of NFC for transactions in the US. iPhone has a dedicated customer base of millions of users who are used to experimenting with cutting edge apps, interface, and haptics, making them more open to new technologies and innovation.

As for users in the US, I believe they will be open to using NFC for payment for three reasons: 1. Speed of transaction: less waiting in line to make the payment. I strongly believe people are willing to adopt new technologies if it cuts down wait time,  even by few seconds. For example, I do a finger scan at my gym to check in so I don’t have to wait in line. 2. Ease of use: all one needs to do is wave your phone. 3. Ubiquity of phones: while many of us may accidentally  leave our wallets in another purse or jacket pocket, we’re never without our phones.

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