Good Bye to Credit Cards

FOCUS-GLOBAL.CO.CC- It is being promoted as the beginning of the end for high street shopping with a plastic card. Technology that will allow people to make purchases by swiping their mobile phone across a till scanner is to be rolled out from this summer.

Consumers will be able to buy a cinema ticket, a sandwich or cup of coffee without the need for a card or cash. Barclaycard and the UK's biggest mobile phone network, Everything Everywhere, which includes Orange and T-mobile, have signed a partnership to bring the system to 40,000 tills.

The two claim it will be the the biggest revolution in payments since credit cards were introduced in this country more than 40 years ago. Chief development officer for Everything Everywhere, Gerry McQuade, said: 'This is the beginning of a revolution in how we pay for things.

'It’s a cultural shift that is as important as the launch of the personal credit card or cash machines.'

He added: 'We’re making something that’s been talked about for many years a reality and, very soon, using your mobile to buy a sandwich, a cinema ticket or, in time, even something bigger like a computer will simply be the norm.'

Initially, there will be a cap of £15 per transaction, however the banking industry expects this to rise, allowing virtually any purchase to be authorised with a swipe of a handset. It represents a landmark move in the development of the mobile phone into a must-have tool of modern life.

The handsets has already moved way beyond simple calls and texts with the addition of music, videos, email and internet access. In future, it will become a virtual wallet.

The bank and mobile phone networks are in talks with handset manufacturers, including Apple, Blackberry and Nokia, on including the technology in their devices.

The system works by installing a tiny chip and antenna in the phone, which ties the handset to the owner and their credit card or bank account. The antennae sends a radio signal to a till scanner which recognises the handset, authorises the payment and then deducts the money from the owner's account.

The till scanners capable of communicating with the handsets are already being used by thousands of retailers to handle payments through swipe cards available from Barclays and others.

For example, coffee shop chains like Pret a Manger and EAT, have the terminals installed. The Oyster card system used on the London Tube and bus network uses similar technology.

However, many consumers may be suspicious of the claimed technological advance. Any system that encourages people to use their credit card more often, even for small value purchases, could generate huge interest charges.

There will be also be suspicions about the security of the technology, given the recent history of bank innovations. The introduction of four digit PIN numbers and microchips in cards in 2006 was supposed to effectively kill card fraud. However criminals simply found new ways to create clone cards and raid the accounts of victims.

The creation of mobile payments would suggest a possible security issue if a customer's phone was lost or stolen but Orange have insisted the system is secure. A spokesperson said customers would be able to use a single contact number to cancel their phone and 'mobile wallet', meaning no transactions could be carried out.

Customers also have the option of adding a PIN code and Orange insisted mobile payments would be subject to the same fraud guarantees as transactions nationwide.

Mr McQuade said: 'Orange and Barclaycard customers will be the first to be able to use their mobiles to make payments on the high street wherever contactless payments are accepted.

'This is part of our wider strategy to re-define what people use their mobiles for, with mobile payments being the start.'

Chief executive of Barclaycard Consumer Europe, David Chan, insisted the new regime is secure. He predicted 'explosive growth' in payments via mobile phone.

'I believe that future generations will find it surprising that early this century we were stil carrying separate items to buy goods and to communicate with each other,' he said.

'As payment experts, our role is to make it easier, more convenient and incredibly secure for people to make purchases and manage their money while on the move.'