Friday, February 16, 2007

From paper to plastic to mobile phones?

Diablogue has a link to an overview in the Economist today on the Future of Money. The issue of money itself would not normally interest me, but this article looks at the change in the way that consumers are paying for goods and the move towards using mobile phones as a method of payment. I’m discussing some of the points below, but give the article itself a look, it makes for very interesting reading.

I have been surprised that pre-paid ‘smart’ cards like the Hong Kong’s Octopus and London’s Oyster cards for public transport have never filtered throughout the country. Having been around for a number of years, they have already proved extremely popular and in London, apparently account for 3 out of 4 journeys on the underground and buses. Instead of fumbling around for money to pay the conductor, passengers can simply hold their cards over a reader which deducts the price of the journey from their card. Surely by now this technology should have at least spread to the other cities in Britain?

While we are still waiting for this technology to reach us non-Londoners however, in London, New York and Tokyo money is beginning to move yet again, from plastic to mobile phones. It is being done using the same type of technology as that found on these other “contactless” payment systems. Basically, a device reacts with a reader, and due to the fact that the device itself only costs a few cents, they could be inserted into every new mobile phone. And, because the device is within a phone, it can be a lot smarter than ‘smart’ cards because they can be deactivated remotely; they have a screen that can show information, they have a keypad to input information and most importantly perhaps, they are able to communicate.

The appeal of this e-cash, apart from the speeding-up of transactions is that no change is required, counting errors are eliminated, fraud and theft are reduced, and, for the retailer, it reduces the cost of handling money.

Sounds great.

There will presumably be resistance to the idea however and plenty of teething problems, but in a world where we want to do maximise every second of the day, I think that this mobile payment system will become popular relatively quickly. But then, it may very well be dependent on the support from banks and credit-card firms as well as retailers themselves. That is not to say however that the system will not receive such support if it proves itself to be effective. Alas, like the smart cards, I fear it may be a very long time until the system makes its way out of the larger cities and into the population as a whole.

I find the whole thing quite fascinating though and it is interesting to read how the system is developing already in the cities and countries embracing the technology. Maybe the world shown in ‘Minority Report’ is not too far away after all…



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