Visa Introduces a Cellphone System To Pay With Credit
In Malaysia, Visa has introduced a cellphone payment system that uses a chip in a cell phone to communicate the 
payment transaction with the merchant terminal. Japan currently uses a similar phone payment scheme, and it is expected that this technology will be rolled out into other countries in coming years.
Here’s how Malaysia credit card buyers use their cell phones to make payments:
- They buy a phone having the special field communication chip in it (like the Nokia 6212).
- They connect the phone with their bank via the mobile Internet to set up the payment account.
- When they’re ready to pay for something, they wave their phone within 4 cm of the merchant terminal, which is exactly like swiping the magnetic strip of a credit card through a terminal.
Currently, the United States has a similar payment system used in a handful of retail establishments which uses an R.F.I.D system. Think about Mobile SpeedPass - where you could flash your special keychain at the gas pump and automatically pay for your gas. This system creates tags in credit cards or for keychains, so instead of swiping the credit card through the terminal itself, you simply wave the tag or keychain to make the payment. The use of the R.F.I.D system is not very widespread yet, as there are concerns over unintentional purchases - for example, what happens if you walk by a terminal but did not make a purchase? It’s possible you could be paying for the person who is currently checking out.
The cell phone equivalent being used in Malaysia offers password encryption for the payment capabilities within the cell phone. That way, if a thief runs off with your phone, they can’t also go on a spending spree using your phone.
The system is currently expanding to make it possible for the phones to handle multiple payment accounts - so users could pay for their parking and public transit through one payment account, their groceries on another. Additionally, these phones will soon make it possible to allow both credit and debit transactions to take place through the phones, simply by selecting which account to use when you pay using the phone.
What is the purpose of using phones for payment instead of credit cards? Visa is hoping to appeal to individuals who have their phones accessible at all times, and therefore find it easier and quicker to pull out their phone at the retailer checkout line rather than finding their credit card in their wallet.
In the United States, Visa is currently testing various ways of enhancing credit cards by using text messaging services and coupons for Visa merchants. For Android smartphone users, they can receive coupons on their phone for retailers near their current location right on their phones - and there are plans to roll out the coupon system to other smartphones in the near future.
