If you've ever tried to feed notes into a supermarket's automated checkout, found a dodgy pound coin in your change or lost a fortune on a night out, you'll know that cash isn't perfect. Wouldn't it be great if we could replace it with something more up-to-date? If that's what you're thinking, the giants of tech are thinking what you're thinking too. Thanks to Near Field Communications (NFC) technology, your mobile phone could be your wallet too.
It's an old idea, but NFC has given it a new lease of life. NFC chips offer secure, short-range wireless communication, enabling you to wave your phone to pay. You might wave it at a till in a shop, at a vending machine in the street or at your friend's phone to lend them a few quid. If you live or work in London you've probably encountered NFC technology already: it's in every Oyster card, making public transport a little bit less annoying.
Google's spending serious cash on NFC technology, and the chips are beginning to appear in Android-powered smartphones; in America, Google Wallet uses phones as payment systems in a wide range of shops. NFC chips are appearing in new Nokias and BlackBerries too, and it won't be long before NFC chips are in pretty much every kind of mobile device.
NFC chips also appear in many UK credit cards, and users of the Samsung Tocco or Wave Quick Tap on Orange can take advantage of Orange's Quick Tap mobile payments system. To take advantage of that you don't just need the right phone, though: you'll also need to be a Barclays customer or have an Orange credit card. Orange reckons you'll be able to tap to pay in 50,000 stores around the UK including branches of McDonalds, Pret, Little Chef and Subway.
You don't necessarily need NFC to take advantage of instant mobile payments, though: in the US Starbucks has processed some 20 million mobile payments via an app that Android, iPhone and Blackberry users can use to scan in-store barcodes, while Apple's new EasyPay enables users to pay via Apple's iPhone app using their Apple ID. Walmart, ASDA's parent company, is apparently considering a similar scheme.
So what are the benefits? Convenience is the biggie, because you'll never need to dig around in a pocket, wallet, purse or bag to find the right change. However there are downsides too: if your chosen payment scheme is linked to your bank account and you don't have sufficient funds, you could incur some nasty charges. Security is fairly lax on purchases under £15, too, and as tech site The Register points out, "an attacker could set up a fraudulent merchant account, then roam the capital's Underground with a battery-powered reader lifting as much as £15 a time off the unsuspecting public before cashing in at the end of the day." However, unlike real cash you set a PIN code to prevent purchases from happening automatically, and unlike real cash you can stop your e-cash from being used if your phone is lost or stolen.
The technology is here and it works, but the question about whether mobile payments will take off isn't really a technological one: for all its flaws, cash has been around for a very long time and everybody trusts it. The public's trust in mobile payments, electronic wallets and other doo-hickeys isn't as well established: according to a 2011 survey by Retrevo, only 1/4 of consumers are keen on buying things via mobile wallets. Ultimately, though, convenience will out: if it becomes easier to pay electronically in the places we eat, drink and shop, then e-cash will triumph.