Will Smartphone and Mobile checkouts replace credit cards?

By: Roger A Lee


Technology keeps advancing. What was a dream or an idea a few years back in now reality. The future keeps approaching at a faster and faster pace.

It was only a few short years ago that rumors started to swirl about being able to use your mobile phone to conduct business, and banking. It seems like in the blink of an eye, the iPhone was launched by Apple opening the world of imagination and the possibilities of a computer in your hand. Along came the andriod phone, competitors to the iPhone and without the restrictions of Apple and developers went into overdrive developing applications that could be used by these Smartphone's. With days we were all adding the word "app" to our vocabulary.

The news still kept coming about being able to use your Smartphone to do all sorts of new things; one of those was scanning and the use of Bluetooth and the storage and transmission of data. It was the airlines that first started to actually use the Smartphone's in commerce. You could now have a board card simply on your phone and show it to security and at the gate, you were truly ticketless. You simply held your Smartphone screen to the scanner and on board you went.

This new technology was wonderful and the Smartphone market grew around the world, it is estimated that now over 35% of the phones used are Smartphone's and that number continues to grow.

Slowly, the industry has been taking the steps to use our phones as payment devices. I keep reading that these Smartphone's will one day replace credit cards. That is not a complete or accurate statement, what is should say is that one day these phones will mean that we do not have to carry the plastic card around with us. Your Smartphone will not issue you credit, your credit will still be either a credit card, a debit card, a checking or saving account. Regardless if the payment you make is charged directly to your cell phone account and the cell provider deducts the funds from your approved payment method or the Smartphone simply works as a device sharing the data between the merchant and the transaction processor. Either way the Smartphone will not replace your credit card account only your method of sharing the data with the merchant.

There are several retailers, mostly restaurants and coffee shops that are using this method, as it requires security, accuracy and convenience.

If you remember a while back, a new idea of a card that was scannable became popular, you simply waived your card in front of a scanner or close by and your charge was processed. In the long run, the customers were too worrisome. The major coffee houses in the US implemented this process and I remember one morning holding my card in my hand but the order taker had not finished processing the prior customer's sales and it was all charged to my credit card, without my knowledge. Not on purpose of course but the system lacked controls and were not customer friendly. The grocery stores began offering this service especially at the self-service checkout lines where it was more successful.

The future is close, but it is not here yet, but it is going through a slow beta test process so the processors, retailers and merchants will have it right. It is the future.

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Barry Norman is a contributor to and blogger at firstcredit.net. For over ten years FirstCredit.net has provided consumers free information helping them make sense of credit cards and the financial industry. Whether you are a longtime cardholder or looking for your first credit card, FirstCredit.net can help you make informed decisions.

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