FileHippo News

The latest software and tech news

With the advances in smart chips on the market today, it is easy to imagine a world without cash or credit cards; a simplified... Will Virtual Credit Cards Work?

With the advances in smart chips on the market today, it is easy to imagine a world without cash or credit cards; a simplified world where people carry only their Smart Phones to fulfill all their communication needs, identification and purchase demands. Cash, driver’s licenses and credit cards would become obsolete. This is the world envisioned and accepted by many people in areas currently adopting these new communication techniques. How realistic is the vision of Smart Phone applications actually replacing cash and credit cards in a modern society?

Google Wallet

One of the great enablers of this Smart Phone technology is the creation and adoption of standards using a new communication protocol called Near Field Communication (NFC). This technology allows communication between devices in close proximity. NFC is used between a Smart phone and a special receptor chip, called a ‘tag’, which is then installed in any of a number of different devices from electronic ticketing machines to retail payment systems. This technology is available now and is being used in many locations world-wide from ticketing systems for transport in Italy, Germany and Austria to public bus transportation in China where credit card payments are accepted via Smart phone.

The only obstacle for replacement of credit cards with Smart phone NFC technology at this point is the installation of ‘tag’ devices in all retail outlets, restaurants and other places of business. This evolution has already begun with many stores and restaurants already providing systems with NFC chips such as Home Depot, Radio Shack and others. A recent study by Harry McCracken, a writer for Time magazine, proved the feasibility of the technology when he managed to spend one week using only the Smart phone for purchases instead of his credit cards. He notes that the simplicity can be flawless but there are still many limitations due to the fact that the infrastructure is still evolving. He encountered endless problems with the technology due to many different factors: a) areas lacking reception such as sporting events, b) retail outlets, gas stations and restaurants not yet updated with the new technology, and c) lack of training on the part of staff not familiar with the NFC devices.

These difficulties can be expected with the implementation of any new technology on a grand scale. The advantages of using Smart phone NFC technology in place of credit cards are plentiful including the simplicity of the transaction and the extra security options available for tracking and disabling. In time, it is beyond a doubt that NFC Smart phone technology will advance and credit cards will become obsolete and useless like the paper checks of yesterday.


[Image via Geeky-Gadgets]