Mobile Payment Systems Poised to Kill The Credit Card

Monday’s headline from CNN Money says it all: The end of credit cards is coming. Although NFC technology and mobile payment systems have been beta tested in very small pilot programs in recent years, 2011 is widely expected to herald the dawn of a new era in how consumers pay for goods and services. Last …   Read More

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Monday’s headline from CNN Money says it all: The end of credit cards is coming.

Although NFC technology and mobile payment systems have been beta tested in very small pilot programs in recent years, 2011 is widely expected to herald the dawn of a new era in how consumers pay for goods and services.

Last week on MMW, for example, we covered  how Starbucks is coming on every bit as strong as its coffee in the realm of mobile payments. This year, the coffee giant is expanding its mobile payment system across the US in 6,800 Starbucks stores and 1,000 more Target-based locations.

But why is this finally the year when mobile payments take hold?

As CNN reported this week, 2011 is the “magic year” because millions of phones capable of making contactless payments – potentially even the 5th generation iPhone – are going to begin reaching consumers.

Given the high hopes for mobile payment systems this year, contactless payments are forecast to make up $22 billion in transactions by 2015, according to research firm Aite Group.

“Mobile payment is going to get really interesting and is going to see a lot of activity in 2011,” said George Peabody, director of emerging technologies at Mercator Advisory Group. “We’re going to start seeing more and more people leaving their homes without their wallets.”

On the other hand, Jane Cloninger, director at Edgar Dunn & Co., a consulting firm specializing in financial services and payments, cautions that the aforementioned technology – and consumers’ comfortable adoption of it – will take some time to catch on.

“I definitely believe that the mobile wallet will eventually replace the plastic card – but it’s going to take some time because consumer habits take a long time to change,” Cloninger warns. “But where before it’s been a lot of discussion, we’re at the point now where you’re going to start seeing momentum toward it and going to see it move beyond the trials and into reality.”

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7 comments

  1. Jacob

    Guys, so IF I get this correctly, the mobile phone is a pre charged payment card, so not really a "credit" card , more like a limited debit card.

    Loose your phone, loose the pre-charge, …, right?

  2. Bjorn Hildahl

    As the research shows, mobile payments are an increasingly important avenue for companies looking to capitalize on m-commerce. As the technology continues to evolve – through NFC as well as RFID and barcode scanning devices – it’s vital for companies to create a long-term plan that addresses the future implementation of these technologies. I work for Kony, and in order to maximize the continued success of your m-commerce offering you must first mobilize your offering’s core services. Once this is complete you can introduce additional features that add mobile value (location-based services, spend monitoring, etc.) and desired mobile payments options. This process will allow your company to build a solid foundation for your offering while enabling you to easily address and employ new mobile payment technologies.

  3. bert

    aaahh this will be great for our new business as we are launching a new pre paid debit card that give cashback everywhere in to your card so it will be easy for us to add an app to do it have a look http://www.cashbackcard.co no not .com

  4. Wynand Vermeulen

    Angel – there are a few options where to store the actual payment data, but in general it is stored in a NFC Secure Element inside the telephone. The NFC Secure Element can be the SIM card (UICC – most SIMs today are UICC), or a special MicroSD card inserted into the phone, a special chip inside the telephone, or even a sticker on the back of the telephone… The Secure Element and an special antennae turns the phone into a contactless card, that can be tapped to pay.

    It is all quite complicated indeed and detailed specified in hundreds of thousands of pages of specifications, but don't let that worry you, secure systems are by nature quite technical beasts…

  5. Angel

    That's great but I am bit confuse about the process….if people make payment through mobiles then where would the payment details would be stored? At telecom providers or in bank like credit card.

    Ahhhh….quite complicated.

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