In the not-too-distant-future, technology will enable progressively-minded users to travel everywhere without cash and credit cards. A wide variety of innovative mobile payment applications promise many of the advantages of top-of-the-line communication technology without any expensive hardware whatsoever. For example, NFC chips enable smartphones to operate as electronic wallets. NFC or near-field communication devices are based on short-range wireless technology that usually utilizes a distance of less than 4 cm. They operate at set frequencies and rates, always involving an agent and an aim. The agent generates a field that can propel an inactive target. This allows the targets to utilize simple devices and apps such as tags, stickers, and cards without batteries. However, NFC may soon be a thing of the past. There are new and improved ways to make mobile payments.
High-tech cards are key where smartphones are concerned. Cell phone users will soon be able to store and see receipts by means of the so-called Fig Card by PayPal and get special offers through Zumogo by ProPay, all based on innovative technology.
PayPal was the first enterprise to turn users’ and providers’ attention to the hardware-free approach. They acquired the Fig Card recently to this end. PayPal is expected to use this technology to enhance its status at the point of sale. Fig enhances the available hardware in modern smartphones. The aim is to design a system that makes it easier to stand up to commercial and customer adoption challenges where mobile payments are concerned. Fig Card makes use of a mobile application on user phones and a USB device that retailers plug into their cash register.
The response of the big players
These developments put pressure on conventional providers like Visa and MasterCard. In effect, these corporations have started testing hardware-based approaches to wireless payments in North America with the aim to grab a piece of the pie.
Senior management at Dwolla, ProPay and other innovative enterprises that offer software-based mobile payments are getting in line behind PayPal and embracing its approach. The Zumogo application for smartphones, for example, is an alternative to NFC. This app enables users to receive payment requests from merchants instead of waving an NFC-equipped mobile phone in front of a terminal to carry out a transaction. The user verifies the transaction through a payment card in their account.
One innovation, planned in the coming weeks, is giving merchants the opportunity to post deals and allow clients to keep in touch with them via chat. The company Dwolla, which is based in Des Moines, already has formed partnerships with ten financial institutions, which intend to offer the mobile services directly to their clients. Their approach is a little different in that clients send payments directly through the application instead of getting payment requests from merchants. An undeniable advantage of these technological innovations is the low transaction cost. The transactions cost far less than they would if they were carried out via credit and debit cards, which is a big plus for merchants. There are no chips, no near-field, no scanning or tapping. You will be able to pay for dinner, groceries, clothes, cab fares, and more with just your smartphone!
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