Tech May Melt Plastic Money

Even with more than 180 million credit card users in this country, there are major technology changes which could render plastic money less desirable if not obsolete, according to industry experts.

Apple reportedly is adding a new level of tech in its new iPhones and iPads that enables consumers to swipe their cell phone in front of a reader for purchases.

A Near Field Communication chip inside a phone would allow the device to be used this way. Apple would have direct access to your bank account, and the process would work the same as a debit card.

The new Apple tech, scheduled for release in April, could change the way consumers purchase retail goods. Even so, some forms of this tech are now available to consumers.

One app is in credit cards with PayPass, a feature that allows credit card owners to tap and pay, or have it on a keychain. PayPass was released in 2005 and companies, including McDonald’s, use the technology, but it’s still in the context of a credit card.

Also, there are some smartphones with NFC chips, such as Nokia’s C7, which debuted in late 2010.

Other Nokia phones also have the chips, but the software isn’t functional yet for consumers. When the software is released, you’ll be able to upgrade your phone.

State of Market

There are several apps right now which envision smartphones replacing old habits.

For example, you can now have your boarding pass on your smartphone instead of getting a hardcopy pass with your credit card when you arrive at the airport.

And Starbucks has a new app that enables you to purchase drinks using your smartphone instead of cash on your credit card.

NFC Tech Security

If you lose your smartphone, is there a way to freeze your account?

Apple can not only locate your phone through GPS, but it can shut down the application remotely.

Further, the user will need to have password protection to help prevent hacking into the phone’s files and other sensitive data.

Who Will Benefit?

If the NFC technology connects with the public, Apple will likely benefit the most since it will become the new middleman for banking and transactions.

Apple wouldn’t have to pay processing fees to other credit card companies, as it does now when you make an iTunes purchase.

How it will affect business owners?

They will have to purchase the device to accept payment through an iPhone (the same way businesses have to purchase the device that accepts PayPass).

So, while consumers may be onboard and ready to start using their iPhone and iPad for mobile transactions, they may be limited by how many businesses actually accept this form of payment.

Consumers will benefit because of ease of use.

When the iPad debuted, many people liked being ahead of the tech curve. Consumers also might see benefits and loyalty programs evolve because the phone would be a one-stop shopping hub.

No Perfect Solution

Someone can hack into your smartphone without you knowing it, and there’s also the risk of losing your phone and its sensitive data.

It’s possible some people will spend more by downloading music or other apps. They already have your credit card number, and charges of 99 cents can really add up.

What Lies Ahead

WMB doesn’t envision NFC tech as something consumers are going to adopt en masse.

We don’t see credit cards becoming obsolete. We view the new tech as just another and easier way for people to buy goods and services.

The tech, however, could evolve into the new norm, with credit cards serving a back-up role.

WMB also believes this new tech may be the prelude for electronic currency, a much more convenient method than traditional coin and paper.

TechMan