Five years ago it was unthinkable, but soon it will be possible to use your cell phone to do payments from your debit or credit card accounts. This will be made possible by NFC.

Near field communication (NFC) is a chip that can communicate with other devices in its vicinity, almost like bluetooth. Together with single wire protocol connections, it will enable you to make payments via your cell phone.

The international GSM Association has already requested cell phone manufacturers to include NFCs in all new cell phones as of 2009. The good news is that South Africa also makes use of the GSM cell phone standard and therefore we can expect to be able to use this technology soon.

How it will work

Your credit and debit cards will be linked to your cell phone’s sim card. When you buy something, you will swipe your cell phone over a scanner and your sim card will send your debit or credit card’s data with NFC to the scanner. You then have to enter your PIN number into the scanner, and the payment is done!

Tried and tested

Test runs with this type of technology have already been conducted in various countries. Generally consumers are looking forward to this new addition to cell phone technology.

In South Korea, there is a system called T-money, with which consumers buy bus tickets, which is then placed onto a card. Swiping the card over a scanner gives access to the bus.

In Japan the technology already goes a step further. With a Docomo phone, consumers swipe their phones over a scanner when buying train tickets or cold drinks. Cell phone group Docomo is also looking at the possibility of electronic readers that can scan a person’s phone while the phone remains in the person’s pocket or handbag.

Pros and cons

Although this technology will make it totally unnecessary to carry any cash around and therefore make shopping safer, there may be a number of problems:

    • It may take some time to get all shopping outlets on board.
    • The cost implications of this service are not clear yet. How much more will such a cell phone cost, and what will be the influence on bank charges?
    • Are there any security risks involved and what are the measures necessary to counter these risks?
    • Consumers with no or little financial discipline may find it too easy to spend money, leading to over-indebtedness and the social problems that go with it.

As with many other technologies, consumer responsibility will be needed in order to use this technology to our advantage.