Wave your phone, make a payment

PC World - Wave your cell phone at a Coke machine, hit a couple of keypad keys, and moments later an ice-cold beverage tumbles into your hand. Lack of loose change (or a credit card) becomes no barrier to the pause that refreshes.

That's the vision of so-called contactless payment through cell phones--and slowly but surely, all the elements required to make that vision a reality are falling into place. At CTIA Wireless 2007, Visa is demonstrating its mobile payment application, which lets you use a cell phone with embedded Near Field Communication (NFC) technology to make payments to vending machines, parking meters, or any merchant with an NFC reader.

You must launch the app and choose the Payments option to activate the NFC technology and transmit a payment through your Visa card. The Offers menu item will display Visa merchant offers (but only on an opt-in basis, Visa promises). Verisign has partnered with Visa for this functionality; the offers will arrive as SMS text messages, but will only appear in the application, not your SMS inbox.

The Account option uses secure over-the-air (OTA) technologies to let you manage your Visa account the way you would with a desktop browser--view statements and activity, pay monthly bills, and so on.

Visa says some 50,000 merchants--including McDonald's and 7-Eleven outlets--in cities such as Atlanta, New York, and Philadelphia already have NFC readers. What's missing are the phones--handsets with embedded NFC chips are not in mass distribution, and the Visa application only exists for Java phones at the moment--and support from the banks that issue Visa cards. Visa says they are waiting for the phones and merchants to reach a critical mass.

MasterCard, meanwhile, is also engaged in various trials and pilots--in Korea, Taiwan, and the U.S.--of its own NFC-based system, called PayPass. The company is also trying out technology that would enable international money transfers between individuals.

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