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Mobile payments – will your phone replace your wallet?

by Jenna Mc

The growth of the smartphone industry has made our mobile phones an essential part of our lives, it is the one item people really can’t live without. Now developments in the mobile payment market may mean that our phones will replace our wallets. PayPal has said that by as early as 2015 wallets will become a thing of the past!

Near Field Communication (NFC) is the short range wireless technology that underpins many wireless payment systems. NFC always involves an initiator and a target, and typically requires a distance of 4cm or less to allow the user to exchange information or in this case make a payment. A simple tap of your card, key fob, or mobile phone is all it takes to pay at the checkout.

Mobile payments can also be made through apps, like the one developed by PayPal and Pizza Express. This app allows Pizza Express customers to pay for their meal without talking to a waiter.

PayPal’s recent acquisition of mobile payments provider Zong for $240 million also highlights the growing importance of the mobile payment industry. But Paypal isn’t the only company getting in on the action. Google unveiled its mobile platform in May, named Google Wallet. This app is currently undergoing testing in the US but already has several big partners like Subway, Macys and Walgreens. As the promotional video below shows, stores hope to improve the customer experience with mobile payments by making their shopping experience more fun and the transaction easier.

The technology has been slower to take hold in the UK. Earlier this year Orange and Barclaycard launched Quick Tap a contactless payment system that utilises both Orange mobile phones and the Mastercard PayPass contactless point of sale technology. The service is similar to Barclaycard’s current contactless payment cards service as consumers’ purchases are limited to no more than £15 at a time. This slightly limits the possibilities of the technology at this time.

Although in June 2011 the UK’s biggest networks announced a new joint venture to bring NFC technology in phones to the masses. The new initiative, comprising of Vodafone, O2 and Everything Everywhere is designed to make an open platform for other businesses to implement NFC Payment systems. This will mean the NFC- enabled mobile phones will become widespread in the UK.

According to market analyst Juniper Research the mobile payments market will triple by 2015 and be worth $670 billion. However research by YouGov suggests that people aren’t interested in mobile payment services in the UK. The lack of awareness about the technology was a one problem which was highlighted. This presents an opportunity for mobile providers to educate consumers. Security was also a big issue. Many people are unsure of how safe their personal details will be and how the risk of theft will be prevented.

How would you feel about leaving your cards and cash at home and instead using your mobile to pay for your lunch?

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