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Between near-field communication and intelligent phone-based apps, your wallet may soon be extinct.
Near-field communication, or NFC, operates from a hardware chip inside of your smartphone.
And a variety of “wallet” apps — like Apple’s Passbook for your baseball tickets and Starbucks’ own app for your Frappuccinos — make it possible to get quite a bit done in a retail store without even touching your wallet.
NFC-enabled devices give you a way to wirelessly communicate with other NFC devices. Though it has its roots in RFID, you might think of it as another type of Bluetooth – a way to share data without wires (although NFC devices have to touch or be inches apart to communicate).
A big part of this is already a reality today. Google and many other noteworthy manufacturers are putting NFC chips in their phones. Once a retailer puts an NFC device in its stories, you can pay for your items by tapping your phone against the store’s NFC receiver. Behind the scenes, computers charge your credit card, debit from your bank account, refund you for a return, or whatever else needs doing. Google Wallet, one of the most popular NFC apps, claims support at “hundreds of thousands of stores nationwide.”
This isn’t especially new technology – in February 2006 the Nokia 6131 was the first NFC-enabled phone.
There are still some big hurdles to overcome, however. One of them is NFC-compatible ID information, like a digital version of your driver’s licence. This unfortunately won’t be available until the government gets on board and works out a system to support it, but in 2011 a company called Intercede demonstrated how an NFC government ID could work.
On the software side of things, we have a number of “digital wallet” apps offered by companies like Google and Starbucks that make it possible for your phone to do everything your credit cards can do.
The Starbucks app has made a bit of a name for the company in the alternative payments space. It generates a unique barcode tied to your Starbucks account. As you buy your beverages and the cashier scans your barcode (directly on the iPhone screen), Starbucks debits your account. Number of times you have to touch your wallet: 0.
Google Wallet is a far more robust payment system, enabling access to debit cards, credit cards, loyalty cards, and gift cards among other things, as well as redeeming sales promotions. It even works in conjunction with NFC so you can pay for items in-store. As of May this year, it will even let you send money as an email attachment. Again, your wallet goes untouched.
The only problem facing these alternative payment systems is probably adoption. Right now they are still niche products in terms of the general consumer population. People are attached to their physical wallets, and the idea of going around without one will take a lot of getting used to. The question becomes: when will NFC catch on? It’s something of a chicken-and-egg problem. People want cool technology when it’s widely supported. Retailers would love another means of acquiring your money, but they don’t see enough interest in NFC to support it.
Early adopters will set the tone here. When that day comes (technology has a certain inevitability about it) and everyone’s banking, credit card, and ID information is available through NFC chips and smartphone apps, they could smile to themselves about how they were doing it way back when.
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