A recently released survey from the Federal Reserve Board says that one out of five people in the United States accessed their credit card account, bank account, or other financial account through their mobile phone last year, and another one of those five said they would probably use their phone to access their account sometime in the future.
Once upon a time, credit cards themselves were the news of the future – not so long ago, paying for a purchase with a piece of plastic was new and novel, right out of a futuristic book or movie. Only in the last fifty years has credit card use become widespread, to the point where it`s virtually impossible to get along in today`s world without pulling that little plastic rectangle of out of your pocket or purse to pay for shopping.
With invention of data transmitting, smart mobile operating systems, an army of mobile phone apps are marching into the marketplace, allowing people to use their phones to shop, pay bills, check balances, and even set family budgets on their mobile devices, while implementation of NFC technology is growing ever more sophisticated.
Credit-Land.com looks at a few of these futuristic innovations:
Spy Gadget That Transformed Our World
The Near Field Communicationtechnology (NFC) that revolutionizes credit card payment systems today is a brain child of Radio-frequency identification science, or RFID, which was born in a setting worthy of a James Bond movie. In 1945, Russian scientist Leon Theremin invented acovert listening device for the Soviets. The secret Russian spy gadget was able to re-transmit sounds from a powered microphone (“a bug”) planted in a carved wooden plaque of the Great Seal of the United States, given to the American Ambassador Averell Harriman in 1945, and remaining in his study until its discovery in 1952.
In 1973, the ability to use of Radio Frequency, sound and light as a transmission media was re-engineered and patented by engineer Mario Cardullo, becoming a first true Radio-frequency identification device – a transponder, still in use today to identify aircraft and your toll payment tags.
In 2004 the Near Field Communication Forum was established by Nokia Corporation, Royal Philips Electronics (NYSE: PHG, AEX: PHI) and Sony Corporation that transformed RFID into NFC technology, to allow the use of touch-based interactions in electronics for payment purposes. Two years later the Nokia 6131 was launched as the first mobile phone to use NFC under what has become a household name: Bluetooth technology, allowing wireless information transfer. With evolution of operating systems for mobile phones, development of applications that implement NFC has proliferated in to an explosion of new ideas that challenged the old plastic credit card.
- Google Wallet
Google Wallet, launched in 2011 as a joint venture between Google Inc. (NASDAQ:GOOG) and Citigroup Inc. (NYSE:C), is an app that stores your Citi credit cards on your mobile phone, allowing you to pay for purchases and redeem offers with just a tap on a screen. For those of us who are not lucky owners of a Citi credit card, Google has launched its own prepaid card. The mobile software holds all your credit card information in “the cloud”, so all you have to do is run your Google Wallet app to instantly pay by tapping the phone on a MasterCard® PayPass™ reader at a participating store. Google Wallet shows us a future free of paper receipts and plastic cards, one where your phone is all you need to carry. A couple of similar apps, Isis and Opera, launched in the footsteps of Google Wallet as an initiative by major U.S. Banks, are set to compete with Google Wallet and offer essentially the same service. Time will tell how these apps are received and how readily users adapt to their use.
From Payphones to Smart Credit Cards
While NFC mobile payment technology was still developing, in 1983, two German electrical engineers – Helmut Gröttrup and Jürgen Dethloff revolutionized payment for telephone communications by developing a first smart payment card Télécarte that recorded a PIN associated with a specific land-line telephone account to fund phone calls in French pay phones. The card, and its future transformations gave an idea to Michel Ugon of Honeywell Bull to invent the first microprocessor smart card, that was patented as the SPOM (self programmable one-chip microcomputer) creating the necessary technology to program the first chip to be implanted in to all French Carte Bleue debit cards in 1992.
- EMV chips
Relatively new in the US, these microchips were first launched in 1993, and have become the standard in European credit cards since 1998. EMV stands for Europay, MasterCard, and Visa, and it`s a microprocessor chip that`s embedded in your credit card, making it into a “smart card.” The EMV chip is protected by various security features that make it more secure than a traditional card with a magnetic strip. Cards that feature EMV technology include elite cards such as the JPMorgan Select Visa Signature, the JPMorgan Palladium, and the Hyatt Credit Card, but this technology is sure to become more widespread soon.
2012: The Year of Payment Innovations
By 2012, mobile apps and new payment technologies have seen an explosion of ideas. Among them, two new concepts have gained a spotlight in the media:
- Plastyc UPside Visa
This is a prepaid program, targeted toward youth, and the under banked market – those people without access to a checking account. The Plastyc UPside Visa just announced that they partnered with DataArt to develop new mobile apps that offer a full range of banking services via mobile phone, allowing users to check balances, sign up for direct deposit, redeem rewards, pay bills, transfer funds, and even issue paper checks using their phones. Essentially, for these young and under banked consumers, their phone will become their bank. UPside Visa says that they offer services superior to banks, at lower prices, and with less risk to their customers.
- Geode from iCache
This one truly is a thing of the future, as the creator, Jon Ramaci, is currently crowdsourcing funding through Kickstarter and hoping to begin production in late 2012. The Geode would be a single card, stored in an accompanying iPhone case (calling itself an “Appcessory”) that stores all your credit card, store loyalty card, gift card, and membership card information in one place. The secure case could be opened only by you, using your fingerprint to unlock it.
Looking In To the Future
From our vantage point here in 2012, we look toward the future of credit cards and are left to wonder how quickly plastic will become a thing of the past. Exciting new technologies promise to streamline our wallets and revolutionize not only the way we pay for purchases, but how we access our accounts, build budgets, and exchange money with our families. Will you one day give your kids their allowance by touching a button on your mobile phone that transfers money to a prepaid account, which your child then accesses through her mobile phone? It could happen, perhaps sooner than you think. The future, it seems, has arrived.