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Top 10 of 2010: Is now finally the time for contactless and 'light touch' payments?

January 6, 2011

[This was my seventh most popular X.com item last year.]

We often hear that new, better ways to pay are just around the corner. While near field communication (NFC) based contactless payments have been in various trials and limited deployments in many places around the world for a while now, they always seem to be “not quite ready for prime time” for large-scale US deployments.

Recent news may indicate that this is finally about to change. Earlier this week three of the four major US wireless carriers announced they are going after smartphone payments using NFC tech. AT&T, Verizon, and T-Mobile are looking at doing an initial four city test before a wider rollout. The fact that these three cut-throat competitors are working together shows that there is serious money to be had by whomever gets contactless payments right, and the carriers would much rather it be them than the credit card networks.

Indeed, as US cell penetration has risen and ever more capable feature phones and smartphones have come to market, options for cell phone based payments have climbed rapidly.

Another example: PayPal partner Bling Nation is testing its chip tag based payments. (Bling Nation uses PayPal technology to enable consumers to get funds into its system for light touch purchases.) While the carrier NFC-based option only requires a NFC-capable mobile phone to get within a few inches of a reader for the payment to be made, Bling’s tag affixed to the back of a mobile handset must be lightly touched to a reader for payment to occur. This is at least superficially quite similar to MasterCard’s RFID-based PayPass technology.

Key point: Whether you are using contactless or “light touch” mobile phone payments, you’re able to make your purchase quicker and more securely than using a traditional credit card, and you can do it with the mobile phone you already have in your pocket (or hand) anyway.

Click here to read the rest of the blog post on the PayPal X Developer Network.

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