Knowledge Base

Mobile payments - Is your Mobile Phone the future of Money



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.



lives and breathes giffgaff
I've done a few surveys on the subject and though I'm more tech that a lot of people I know ( of forum) I'm not over keen on it yet. Saying that I'm always pleased to see a PayPal sign when I'm buying online as its less hassle so I guess I will be moving that way
Not totally in favour. Think people who have trouble budgeting might find it too easy to spend as is the case with credit cards now. @ pinkcalculator. Worth considering is if you use paypal on goods over £100 you don't get the protection you get with a credit card.
lives and breathes giffgaff
I don't tend to buy much over £100 on PayPal except phones on eBay and my paypal is funded by my cc. But I'm talkng about places like zavvi and thorntons were your reasonably safe anyway
Look here Basically if you fund paypal with your credit card, you're still not covered.
lives and breathes giffgaff
That's what I had thought but when I did have a problem the cc said they would take it on but PayPal sorted it
as this tech is quite early (new) im not that eager or enthused to use it not for a few years yet anyway to see how it evolves and takes off

Not keen on it either and they probably said we'd not be using cash years ago when card payments came out but cash is still a very strong means of payment and a good bargaining tool for discounts. Also was said cheques wouldn't last but there is still a need for them and will continue to be.


This must be getting pushed by the financial institutions as they are keen to cut down on having to move large sums of cash and want other electronic means to reduce their risks and insurance premiums/costs. Just my take on it Smiley Happy


i seen this iphone dongly type of thing you attach and make payments by swiping your card on youtube


which i found really good not sure if i personally would want to but then seeing as technology is expanded god knows what we will be using in coming years..


You say "It's an old idea, but NFC has given it a new lease of life"

I'm sorry but i can't agree that a system which only began 13 years ago can be called "old"...


Nordic Mobile Telecom in 1998 managed proof of concept trials for payment systems via mobile phone with both car parking and  Coca-Cola vending machines being able to take payment this way.

The first commercial system to work like a bank or credit card was launched in the Philippines in 1999  by two operators, Globe and Smart and that is only 12 years YOUNG.


The largest global take-up (by population) of such systems is currently in Africa & India where cheques & credit cards are almost never used. Surely this article should have considered the couple of billion potential users of this technology in these regions?

good blog, i might use paypal but thats all ill use