From the recently launched Barclays Pingit phone app to Google Wallet and Near Field Communication-enabled smartphones, it remains to be seen which technologies will become mainstream.
But in the perpetually web-connected world of 2012 it certainly does look like coins and notes could be going the way of the dodo.
Here’s a look at the ever-growing world of digital payment, which technologies you can already use and which ones are likely to be replacing your wallet in the not too distant future.
Send cash to a phone number
Last month, Barclays launched Pingit, a unique way of sending money to a mobile phone number. Just as Paypal allows you to send money safely and securely to an email address, Pingit does the same for mobile phone numbers.
Pingit comes as a free-to-use application for your iPhone, Android or Blackberry smartphone and allows you to send up to £300 a day to anyone with a phone number and a UK bank account.
You input the amount you want to transfer and the phone number of the recipient. They then receive a text message telling them about the payment and asking you to register with the service to receive payment. If they don’t register within 24 hours, the transaction is cancelled.
Only Barclays current account holders are able to send payments at the moment, as the app is registered against their currents account with the bank, but anyone can receive payments from Pingit.
Barclays eventually plans to roll-out the Pingit service to customers of any bank, which would signal a new era for digital mobile money transfers.
O2 plans to introduce an app to rival Pingit, allowing mobile users to send payments to mobile phone numbers. The difference is, O2 plans to allow customers of any bank to use the app from launch.
The app is currently in testing and said to be preparing for an imminent launch.
Tap to pay
Another digital payment technology is Google Wallet and Near Field Communication (NFC) enabled phones and devices. NFC-enabled phones can communicate with other devices over radio frequencies when tapped together.
Google wallet uses this technology to allow users to make payments in shops or to other Google wallet users by tapping their phone against a payment receiver in store, or against the payee’s phone.
NFC technology isn’t really new and is based on Radio Frequency Identification (RFID) technology, which has been used for years in London Underground Oyster Cards. NFC’s version is the next step in this technology and is now being integrated into phones like the Samsung Galaxy Nexus.
Google Wallet is basically a virtual wallet that stores the details of your credit or debit cards. If you have the Google Wallet app on your phone and shop somewhere which accepts Google Wallet, you can make payment by simply tapping your handset against the payment terminal.
The same principle can be used to transfer money to a friend, who simply taps their smartphone against yours to receive the money.
Industry analysts Juniper Research say that one in five smartphones will incorporate the technology by 2014, but at the moment you can only use Google Wallet with your NFC smartphone in America.
NFC technology isn’t exclusive to Google, as a partnership between Visa and Intel plans to bring NFC payment capability to those with NFC smartphones. When the partnership bears fruit it will no doubt integrate with PayWave, Visa’s contactless payment technology which is already available with some Visa cards and payment terminals.
Matercard’s PayPass system also allows those with NFC phones to pay by tapping their phones against a PayPass terminal. The Google Wallet app is already compatible with Mastercard PayPass terminals.
Meanwhile, Vodaphone has entered the digital payments fray with Vodaphone Mobile Wallet. The network has partnered with Visa to allow consumers to pay for goods and services with their NFC smartphones using Visa’s PayWave technology.
Vodaphone Mobile Wallet will launch this autumn.
What about security?
Barclays says that sending money via its Pingit app is as safe as sending money via online banking because it uses industry-standard encryption.
The Pingit app on your smartphone is also protected with a five digit password, so even if your phone were to fall into the wrong hands you’d be safe. None of your personal banking details are actually saved on the phone, so it’s even safe from hackers too.
Barclays’ security teams also monitor Pingit transactions in the same way as any other transactions and will look out for suspicious or irregular activity. Regardless of what operating system your phone runs, it’s always sensible to make sure you download an anti-virus or security app.
Google maintains that paying with an NFC phone and Google Wallet is safe. There were initial concerns when users discovered apparent holes in security, but Google says the lapses are now fixed.
Payment details are stored in a chip called the Secure Element on your phone, which is isolated from your phone’s main operating system. Only authorised programs like Google Wallet can access the data.
NFC’s short range and the fact that all sent data is encrypted means that, in theory, the risk of payments being intercepted or hi-jacked is slim to nil. The short range means that someone would probably have to touch your phone with theirs to intercept it.
It remains to be seen whether NFC payments will be widely adopted, but rumours suggest Google is in talks with UK companies to bring the tech to Blighty in time for the Olympic Games this year.
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