Can the iPhone kill the credit card?

Stan Ward

Stan Ward

September 8, 2014

While the tech world looks to Cupertino with anticipation, waiting for the next great pronouncement from Tim Cook, a more amazing development is unfolding right under our noses. The ubiquitous smart phone is slowly becoming even more indispensable. It is on the verge making credit cards obsolete.

It wasn’t long ago that mobile phones meant transmitting unsophisticated data such as videos and tunes on a cellular network. But Apple continued to up the ante with speed and variety and the competition to catch them has been fierce. Now, new technology exists which will further enhance the appeal of the typical mobile smartphone. And it is arriving just as a former tech marvel, the credit card, is experiencing denouement. Long the preferred method of paying for items in person and online without using cash, the credit card may soon be taking a back seat- big time. And Apple is leading the revolution much as it did by introducing and pioneering 3G technology.

The next generation iPhone will contain a chip that makes the device scannable at checkout counters. There may be an interim step in the payment at point-of-sale by phone process. First, an iPhone wallet may have to be employed as a way to store the data of multiple cards. The phone would be used instead of a swipe. But eventually the cards themselves will become obsolete as the phone itself will be able to be scanned. Therefore, the way to pay will be controlled by Apple.

It turns out that Apple already has got a great mobile wallet of about 800 million cards on file. As stated, the wallets are presently being used to store the credit cards and their hidden in the technology. But that’s only the first step – the tip of the iceberg. Now that the phone has the credit card number, the next logical step is that the card itself becomes obsolete altogether. Presently, consumers don’t have much of a reason to use their phones instead of a card to pay in stores. And, let’s face it, cards are the preferred means of non-cash transactions with merchants.

But the ever-growing popularity and presence of phones will eventually force stores to accept a pay-by-phone option. While it will be a long time before credit cards disappear, some parts of the world will jump over the card paying process and embrace pay-by-phone technology.

Apple has the ability to succeed where others never could because Apple controls the hardware and the software since their phones have the chip inside. And the ubiquity of an NFC-enabled iPhone will force merchants to the mat as they were never before forced to because so few phones had the capability. Soon the NFC-supported iPhone 6 will rule the landscape and with it such giants as American Express and Visa are ready to jump on board as they’ve reached agreements to work with Apple.

As mentioned, the demise of credit cards, while inevitable, is not around the corner. But think of how mobile phones have proliferated in a relatively short time. One can only speculate that, given its ability to perform so many functions already, the smartphone will be the only accoutrements one needs for paying for things. And Apple is positioned to profit with the new generation iPhone.

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