Smartphones To Replace Credit Cards?

In today’s world, it seems as if just about everyone has smartphones. No longer satisfied with the calling and texting abilities of the standard cell phone, people’s obsessions with smartphones generally lie in the device’s ability to do just about everything. Between surfing the internet and making purchases, smartphones are genuinely do-it-all gadgets.

It would appear that in today’s business world, one must use a smartphone to be truly connected. Google Inc. is among the latest to take advantage of this as it has recently made attempts to utilize the smartphone as a replacement for credit cards, coupons and receipts!

If you’re scratching your head, wondering how this could be possible, you’re likely not alone. Yesterday, Peter Svensson of the Associated Press explained that Google is launching a new payment system in cooperation with MasterCard and Citibank. To be open to consumers this summer, the new initiative is expected to expand across the United States shortly thereafter.

As Svensson explains, Google’s new “smart payment system”, known as “Google Wallet” will initially only work on one smartphone – Sprint Nextel’s Google Nexus S 4G. As well, it will only connect to MasterCard PayPass terminals. The way it is expected to work is through what Google calls a “single-tap solution”.

Shoppers will be able to make payments for purchases through single taps of their phones on payment terminals. In other words, consumers may swipe their phones instead of their credit cards to make a purchase. However, they will apparently still need to sign a screen to complete the purchase.

It has not yet been reported if this new feature will be expanded to other smartphones and point-of-sale terminals. As well, Google’s launch of”Google Wallet” in New York last Thursday saw a Google executive have to tap his phone twice before signing the terminal screen. So perhaps there a still a few kinks in this new service.

According to Osama Bedier, who is Google’s vice-president of payments, retailers may decide whether or not they want their customers to sign the screen. Nevertheless, he is confident that the new mobile payment system is more secure than the magnetic stripes on credit and debit cards. As Svensson writes, convincing both retailers and consumers of this will likely present a challenge.