Tech Thursday: Mobile Credit Accounts

Our tech savvy co-author Scott has referred me to the following Bloomberg article, titled by Bloomberg BW as Scott "Smartphones May Replace Credit Cards".

The article discusses an initiative headed up by the phone companies, but also confirms that the credit card companies themselves are working on mobile phone payment solutions. Between the two groups it sounds like this functionality will definitely arrive at some point. Hopefully the competition will lead to good deals for the consumer.

One thing to be aware of is the startup cost for the businesses involved. As Bloomberg reports, "Merchants would have to spend an estimated $200 per electronic reader, and updating mobile phones with embedded microchips would increase manufacturing costs by $10 to $15 per handset." The hope is that businesses would make this back from savings on credit card fees (about 2% per transaction) and the mobile handset makers would make it back by acting as processor for the transactions.

As Scott points out, it's interesting to see the concept of mobile payments reassert itself after our discussion of the Haiti mobile phone donations and of the Twitpay service, which has conceptual similarities.

How would you feel about making payments via your smartphone rather than by credit card?


  1. My favorite quote comes from the very end of the article, from the industry consultant who says:

    "A card is dumb."

    Well, then.

  2. 1) When I click the first "Scott" link, my office network security blocks it with this block reason: Forbidden Category "Pornography"

    2) Is the second "Scott" link intentionally a circular reference? Or self-link? I like "self-link" better and I think we should actively try to incorporate into the rest of the internet.

    3) I texted the magic word to donate $10 to Haiti relief, but I am pretty sure I never saw the corresponding donation on my phone bill. Have you read any stories about glitches in the actual payments of these donations?

  3. This looks like a different technology from our previous conversations. There is a difference between using a smartphone to access the internet to send an online payment, which has already been linked to a credit card (think using a PayPal iPhone app, but instead of paying for shipping, you pick it up with your hands because you are standing right there); AND adding a hardware or firmware technology to the phone and the mobile carrier acting as the credit company. Even though the difference is subtle, it is a very distinct step forward in terms of technology and business competition.

  4. Wow... the first Scott link is to a picture of the character Skeeter from the Nickelodeon cartoon Doug... I'm confused...

  5. Also Aaron that's interesting about your lost donation... hope that wasn't common.

    Great point about this being a distinct step forward because it's based on hardware upgrades (the aforementioned $200 cost to merchants and $15 cost per handset). This is why I suck at Tech Thursdays - I don't frame the issues very well.

    So is this a technology you would be excited about implementing in your life?

  6. Supplementary article on Business Week about how several phone companies are going to start a pilot program to test this technology with a few select subscribers and towns.

    Guess it's moving forward faster than I realized.

  7. It's not that I'm particularly excited about this technology, I just think it's going to become the norm in the next couple decades. As I mentioned before I think that personal, handheld, mobile electronic devices will become the norm for society.

    Every day I leave the house I need to have my keysphonewallet, whether I am going to work or to a friends place. I envision a future where my keys are replaced by fingerprints, and my wallet is incorporated into my phone.

    Open you wallet right now and tell what it contains. I have my driver's license, a credit card, a debit card, cash and various membership and gift cards.

    Everything in my wallet could be added to my iPhone once the different companies start working together. In fact, I want to get credit for when a startup tech company creates an app that allows you to store your various membership cards that only use a barcode. Shopping at Ralph's or Safeway, scan your iPhone. Buying some beer or wine at BevMo, scan the barcode showing on your iPhone. Even my library card is just a plastic card with a barcode on it. In fact, why hasn't this happened already?

  8. I love everything about this concept. The only conceivable flaw is that cash is still useful sometimes so you may need to roll with a money clip, or at least a $20 rolled up in your sock.

    I think the reason it hasn't happened already is my aforementioned investment which is a barrier to entry. But eventually you have to imagine this will happen.

    I think this would be better for individual security by the way... if my phone unlocks only with my thumbprint, I would feel much better about losing my phone than I would about losing my wallet and my cash/cards/ID.

  9. I'm super excited about your "one app for all membership cards" app. You should create it now. I have removed all such cards from my wallet (getting comically big) with the logical conclusion that I never really needed those things to begin with. Until, of course, I did need them. I use each one perhaps once every 2-3 months, and many allow you to enter your phone number in lieu of the actual card. Why not just make the logical next step - make your phone your card?

    And Aaron - the cell companies announcend way back when that they wouldn't be charging for the Haiti donations (I think one announced first, and the other followed via guilt-trip).