Travelers to South America or Asia may routinely see people waving their cell phones over an electronic pad at the cash register as they pay for their coffee, new computer or movie tickets. These patrons are using a technology called NFC (Near Field Communication) that turns your mobile phone into a kind of credit card. Until now banks and credit card companies in the U.S. have been slow to adopt NFC technology. But now AT&T, Verizon, and T-Mobile are working with Discover and Barclays to test paying with your cell phone system in Atlanta Georgia and 3 other U.S. cities according to Bloomberg.
Unlike the wide spread adoption overseas, which relies on embedding NFC chips in lower end phones, this pilot project appears to be targeting high end smart phones.
The phone companies probably wouldn’t replace the biggest U.S. credit- and debit-card issuers, including JPMorgan Chase & Co. and Wells Fargo & Co., said Gary Townsend, CEO of Hill- Townsend Capital LLC, a Chevy Chase, Maryland-based hedge fund that specializes in financial firms.
Retailers may be eager to help another network after years of fighting over transaction fees set by Visa and MasterCard. The merchants persuaded Congress last month to approve caps on interchange, or “swipe” fees, for debit transactions and filed a 2005 federal antitrust lawsuit that is still pending. The U.S. Department of Justice is weighing whether to bring a civil lawsuit against Visa for barring merchants from surcharging customers who use credit cards, according to the company.
The advantage of the system is that you already carry your cell phone, but of course that also means when you leave your prototype cell phone in a bar that not only might you get fired but you might be buying a round of drinks for everyone.