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Hangups with paying via mobile

Emily Crone

Call me old-fashioned, but I want my cell phone to be a phone ONLY. Well, unless it’s an iPhone, but that is a whole different species. I’m talking about all these new phone/MP3 player combinations featured in commercials with Beyonce. Or paying extra for a phone with a built-in camera and video camera, with quality so terrible, it’s difficult to decipher what the fuzzy images are. I am perfectly content with having a sturdy iPod, a high-quality camera and a well-made cell phone rather than combine them and compromise quality and usability. Now that there is talk of mobile phones being used as credit cards, I am, as you can imagine, not thrilled with the idea.

These new phones transmit payment information via radio-frequency identification. That’s how contactless cards work, too, and in a recent study by UMass researchers, they were able to easily steal “encrypted” information from all 20 of the contactless credit cards they tested. The credit card companies responded by saying that they were working to increase security, and analysts with Juniper Research say that losing a payment-enabled phone would be no worse than losing a plastic credit card. Yeah, and losing a plastic credit card is no walk in the park.

The Royal Bank of Canada and Visa Canada are conducting a pilot program in Ontario in 2008 in which consumers will swipe their phone in front of a scanner to make purchases. There will be lab testing, trials with RBC employees and then a large trial with consumers before products are released to the general public. Hopefully that will give them plenty of time to work out the kinks. Several other trial programs are being conducted around the world.

A company called ViVOtech is conducting regional pilot programs around the U.S., testing cell phones with its RFID chip, which allows for contactless payment.  The company plans to go national in 2008, hoping to have several different phones available by next holiday shopping season. How does it work? The Web site says, “Consumers will be able to easily download credit, debit or gift card and data into their mobile phones by just pressing a few buttons. Card information will be securely downloaded over the air (OTA) and safely stored in their mobile phones using latest cryptographic, authentication and wireless communication technologies.”

Juniper Research predicts that around 12 per cent of mobile phones will offer support for some form of contactless payment by 2011, most probably Near Field Communication. This is equal to nearly 470 million NFC-enabled handsets across the world, which should be enough of an incentive for most retailers to accept mobile payments.

There are other ways to use your phone as a financial tool: several banks have programs that send you low balance alerts via text message, and some allow you to transfer funds and pay bills from your cell phone as well. Mobile banking may be the way of the future, but until then, I’m not giving in. In September, Forrester Research released a report that only 5 percent of online consumers are interested in accessing financial accounts through a mobile device, so apparently I’m not the only one wants to leave their cell phone out of their finances.

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