Wednesday, February 4, 2009

Phones As Credit Cards?

Posted by Mark Brousseau

An interesting article from the New York Times on using phones as credit cards.

"Phones as Credit Cards? Americans Must Wait"
By Berlin, Leslie
New York Times (01/25/09) P. 4

Cell phone-based payment transactions are widely used in Japan, but the technology's adoption in the United States faces a number of hurdles. The various companies playing a role in the technology's rollout have yet to define standards and agree on a revenue-sharing model.

Also required is a mediator that both the financial institutions and the carriers can trust to activate the virtual credit cards inside the handhelds.

For retailers, the adoption of mobile-phone payments means a faster checkout process, while credit card companies would gain a new tool for attracting and retaining customers as well as save money otherwise spent mailing cards.

Equipping cell phones with virtual credit cards is a source of worry for some, given the propensity for phones to get lost or stolen. However, MasterCard Worldwide's Simon Pugh says one solution is for the consumer to call the bank to report the phone's loss and disable the account.

University of Massachusetts professor Kevin Fu is less concerned about the risk of account fraud from mobile payments than he is about privacy infringement. However, he is optimistic that in time virtual credit cards "will become one of the best ways to do mobile payments."

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