Near Field Communication strikes Australia. The end of the credit card?

Mobile Payment - the end of the credit card?The future of financial transactions for the next generation may now be upon us.

With the increasing number and popularity of mobile apps, major financial bodies have been looking towards innovative new payment systems for mobile devices.

The prospective launch of these new mobile payment systems could now spell the beginning of the end for the trusty plastic credit card.

Commonwealth Gold: KaChing!

Last month, Google announced their new ‘Wallet’ app, a system using Near Field Communication technology (NFC) which is designed to make payments easier for consumers while offering retailers more ways to offer loyalty programs.

But they may be beaten to the chase by Australia’s Commonwealth Bank, which has launched ‘Kaching‘, an app which allows smart phones / iPhones to connect with cash registers and to make payments by email and Facebook. It will be available before Christmas to iPhone users with operating system iOS4 or above, and makes CommBank the first commercial provider of a mobile payment system.

CommBank's KaChing Mobile Payment App: the end of the credit card?

Payments on Kaching are made by adding iCarte to the handset, which allows purchases up to $100 to be made by phone where MasterCard PayPass facilities are present.

It is estimated that there are 42,000 such readers and more than seven million MasterCard PayPass cards currently in circulation. For its part, CommBank claim to have over six million online banking users and that more than 16 million log-ins took place in August alone. No doubt the roll-out of this payment system will see a huge expansion of these facilities.

Meanwhile, Eftpos, which accounts for 85% for all debit payments in Australia, has also reportedly undergone a technological revolution, which will allow customers to conduct transactions with mobile phones and contact-less terminals. It is described as the first major change to eftpos’ functionality in a quarter of a century.

Revolution, then, is, quite literally, on the cards.

Bronze-Age Britain?

While America and Australia ready themselves for the next phase in transactional technology, recent phone-hacking scandals in the UK have seriously weakened consumer confidence in secure telephony. A poll of over 1,000 Brits revealed that just 17% would consider using their mobile phones as a card payment device. 44% cited the lack of security software as their main concern.

Many deem a phone more likely to be stolen than a wallet, and there are concerns about the robustness of security measures on a mobile device.

It is unsurprising, then, that CommBank highlights security as having been of paramount importance in developing their app. Kaching includes password encryption, and no personal banking information is to be stored on a user’s phone.

The demographics of the UK survey revealed that the younger generation were more keen to adapt to new technology. A third hoped to use their mobile phones as a credit card in future, while a quarter of under 18s, without credit cards, are happy to use their phones for payment instead of other means.

Testing the Waters

Australian institutions will be the focus of the world when commercial mobile payment systems begin operating. Interested spectators will be eager to see what security issues will arise.

One suspects too that consumers will still need some convincing that mobile payments feel as secure as the material plastic credit card tucked safely away in the wallet.

Does Near Field Communication technology portend the end of the traditional credit card? Do you feel comfortable about this turn to mobile payments? Drop us a comment and let us know!

Keith McDonald

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