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Payments using your Smartphone

If there were not enough “ah-ha” type of technologies pushing the sales of smartphones, one that has not received much love was Near Field Communications.  NFC is a technology for data exchange between compatible devices at close range, about 1.5 inches is the maximum distance. Approved as a standard in 2003, it has stood in the shadows of its bigger brother, Bluetooth until handset device makers started embedding the NFC controllers in smartphones in 2007.  If you Google on NFC, you will find a number of examples of how enterprising businesses are starting to take a look at NFC.  For instance, in London, NFC-enabled phones could interact with movie posters at a theater, viewing a preview clip and link to the film’s Facebook page.  However, the capability that has piqued everyone’s interest is payment processing, the ability to pay with your smartphone like you would a debit or credit card. Despite the interest, other than a Starbucks pilot of NFC that received quite a bit of press last year, not much has been done with the NFC capability by developers or businesses.
The latest player to attempt to move payment processing through NFC into the mainstream is Google with the rollout of their Google Wallet.  What vendors are hoping for is for consumers to leave their debit and credit cards at home, instead using their mobile device to pay for purchases.  The question is: will this technology improve our lives by providing a level of convenience not found with plastic cards?  The idea is that we are coming to depend on our smartphones for quite a number of daily tasks such as check email, track calendar events, etc., paying for purchases would be the next logical step.  Right now, I carry three cards with me, debit card for daily purchases, credit card for major purchases and a swipe card for the bus line.  Would I leave those at home for the convenience of just having the phone (which I carry anyway) do all my shopping?  Good question, they would still work even if my phone died because I forgot to plug it in.  However, I may be in the minority as a recent survey by Accenture  indicates that half of smartphone users would adopt NFC payment processing.  One advantage Google is offering to encourage adoption is the ability to pay, redeem offers, and earn loyalty credit at participating merchants.  It took a bit of time for us to adopt debit cards over paper checks, however, depending on how quickly merchants adopt NFC and place the readers in stores, the uptake on NFC payment processing may not be as long.

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Perry Hoekstra

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