Visa Introduces a Credit Card on a Phone

Visa A cellphone that can charge purchases to a Visa account in Malaysia

I wrote last week about a way to make your cellphone work like a credit card by applying a sticker to the back. The sticker, equipped with a radio frequency identification, or R.F.I.D., tag lets you wave the phone over a terminal to make a purchase.

Visa is introducing a cellphone payment system that is more than sticker-thin. The service is currently available only in Malaysia, but it will be expanded to other countries in coming years.

Like some phone payment schemes already used in Japan, the Visa service uses a chip on the phone to communicate with a payment terminal. But the latest version is based on a global standard for phones and telephones called near field communications.

Here’s how it works:

  • You buy a phone with the appropriate near field communication chip in it, such as the Nokia 6212.
  • You connect the phone over the mobile Internet to your bank to set up your payment account.
  • When you want to buy something, you wave the phone within 4 cm of the terminal at the merchant. The transaction proceeds as if you have swiped your magnetic stripe card in the terminal.

This works exactly the same as the R.F.I.D. payment systems used a bit in the United States that put tags in credit cards or on little key fobs. Indeed, the terminals you now see at fast food shops and drug stores that take the R.F.I.D. cards can also read account numbers on the new sort of phones.

But the chip on the phone adds a few features that may make buying things a bit more secure and a bit more convenient than using the existing R.F.I.D. tags or the phone stickers.

If you want, you can lock the payment capability of your phone with a password, so a phone thief can’t also go on a spending spree. Moreover, even if you don’t lock the card number on the phone, you can call your bank, which can disable it remotely.

As for convenience, the technology standard will ultimately allow you to load multiple accounts onto one phone. The program in Malaysia allows phones to be used to pay for parking and public transit fares through a separate account. Eventually, the system will allow credit and debit card accounts from multiple providers and payment brands. You need to run an application on your phone to switch the default account that is charged when you swipe the phone over a terminal.

And of course, the Visa service might appeal to people who simply think it is easier to pull out their phone at the checkout terminal instead of the card in their wallet. (Does this appeal to you? Let me know in the comments below.)

While the near field communications standard allows for the two-way transfer of information, the payment application is one-way: the phone sends its card number to the checkout terminal. No information is sent back. But Visa and other companies do have applications that send information to the phone over the cellular network. For example, some banks will let you get a text message every time your card is used. (This sort of application, of course, doesn’t need a phone with the special chip that can actually make payments.)

In theory, the near field communication standard will let your phone do other nifty things. It will make pairing a Bluetooth headset as easy as waving it near your phone, rather than futzing with codes and such. And you will be able to tap your phone to pick up airplane boarding passes or giveaways from advertising billboards, if you want a lot of promotional junk filling up your phone.

I asked Pam Zuercher, who runs Visa’s mobile group, how wide the appeal of all this will be. She demurred a bit because the product is being introduced commercially for the first time. And adoption will depend on how available the phones and R.F.I.D.terminals are. But she added that there is a cultural aspect as well.

“My read is that it will be driven by the ecosystem and the landscape of each particular region,” Ms. Zuercher said. “When we look at Malaysia, there is extremely high penetration of smart mobile devices that have the capability of hosting multiple applications.”

In the United States, Visa has tested this technology, but it is emphasizing ways of enhancing credit cards by sending information to phones. In addition to its text message service, Visa has an application available for Android (and soon other) smartphones that will let you see coupons for Visa merchants near your current location. It is also developing a nifty way to associate a short user name, or alias, with your credit card to make it easier to enter when making purchases or transferring funds on a cellphone.

Personally, I’m undecided if I want to actually make purchases with a phone rather than a card. Since my phone and my wallet tend to be with me all the time and they are about the same size, one doesn’t seem much better than the other. If it really works, I might simplify my life and use the phone more.

What do you think? Does any of this make you want to get rid of that gold card so you can say “Charge it on my phone”?

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Why not a wristwatch or ring. There are advantages to it being in a communications device, of course:

-set passwords
-set limits
-auto e-mail transaction details home
-cancel remotely

What do you do when the phone is discharged and you’ve lost your charger? (I’d like to buy this charger. Yes, how will you pay? Well, I can’t, that’s why I need the charger. Sorry, you have to pay first…).

All kidding aside, I’m quite happy with my CC’s and the new chips and PIN code approach.

Smaller wallet = more comfortable day.

Yes. especially for runners like myself who want to carry less with them! if this thing could open my front door then the only thing i would have to carry is my phone, no keys, no wallet, just phone. I like the concept, one device.

I like cash. Can we get a mobile phone that doubles as an ATM?

Citi and Mastercard ran a trial of this in NYC a couple of years ago, issuing Nokia phones with near-field chips to people. I have no idea of the results, but I have to believe that its success may have been stunted by the necessity of either changing cell phones for the duration of the trial (traumatic) or carrying two phones (inconvenient).

Besides embedding Paypass chips in some of their ATM cards, Citi also issues keychain fobs for Paypass; Citi also has a trial going to use the fobs for pay-as-you-go Metrocards. I like the fobs — no fumbling with my wallet in the subway – but they’re indestructible. That’s a problem if you *don’t* want to use them; you need to disable the credit card instead of just breaking the fob.

I’d be up for less cards in my wallet; hopefully this technology hits the states pretty soon.

I’d love this idea, i’ve been to japan and it works beautifully. Yes you’d have to charge your phone… OH NO, we don’t do that already, but I’m a college student and my wallet is way to think with the random cards I need to have on me all the time. If we could but that on my phone I would be elated.

Credit cards sure are convenient and the credit card companies are only going to profit: it sure would be nice to get a percent cut of every purchase made in the world. Visa’s stock is a sure investment.

I think this is a great technological idea (in theory), but in the times we’re living It will just make matter worse. This new idea will create new great career fields for tech thieves and help them make a living out of this new market. It will be like giving a new toy to tech thieves. They will hack this system in a matter of hours just like they have done it in the past. This will only influence and increase their knowledge and creativity.
Increasing unemployment rate is causing people to lose their jobs and homes. Crime rate throughout USA keeps rising daily. Crimes involving iPods, PDA Phones, small laptops stealing are the order of the day. It’s also an important to mention the fact that online bank accounts and credit card purchases are being intercepted by 14 year olds. It is easier for hackers to unlock phones and retrieve passwords than hacking a personal computer. The only solution I see in this report is that if your phone gets stolen, you only have to call your bank or credit card company (using a paid phone, I guess, since your phone was just stolen). You will also have to purchase a new phone and be careful next time. To implement this new technology in the times we are in now, it’s just not a good idea.
Lastly, if we want to fight terrorism, we have to stop making terrorist movies that broaden their evil curiosity: i.e. (Live Free or Die Hard with Bruce Willis – 2007). Similarly, if we want to stop hackers from stealing our identity, bank accounts and credit cards we have to minimize our information exposure over the internet or any other network.

Wouldn’t it be better if I just memorized my account numbers and the system would accept my spoken word with some authentication info. No need to carry even a cell phone. No worries with discharging batteries, or loosing cell phone signal.
And it is a far greener alternative.

libby | credit card April 10, 2009 · 6:01 pm

Could they include your driver’s license, library card etc. I could give up my purse completely. I’m all for light loads.

If they use the camera on the phone and authenticate the transaction using face recognition on the phone that would add a level of security that can’t be beat by a card.

Then again, I’m sure there are hackers out there who will figure out how to defeat it.

I’d be very nervous about having my credit card number “in the air” ready to be read by anything that’s near it. Would it be difficult for a criminal to fashion a card-reader that he could carry on a crowded subway car and read the credit card info that he bumped into? If I recall correctly, the TJX information theft was perpetrated analagously.

And really, is swiping a card considered cumbersome?

i can’t wait. they just need an immediate feature to deactivate your phone card incase of loss. we will look back at plastic cards like we look at vinyl records. security is vital, but this sounds way more secure fundamentally versus RFID…

Ha ha! “look back at plastic cards like vinyl records”? A ton of stuff is being issued, and reissued, on vinyl so that’s a terrible analogy. In fact vinyl never left- it sounds different, warmer and analog.
Although… A Smart Card that pays for things this way would be great. Swipey card wears out every year or so and doesn’t pay for bus fare, parking meters, a lot of little things we need. An Either/ Or card would work better than a phone- the phone is actually a big thing to lug around in a dress or skirt with no pockets if one is dashing in somewhere. And all you need is a phone cover that holds the card if you prefer the other system.
I leave my phone at home all the time just so nobody can bother me for a while. I sure don’t want it on a run or ride; a Smarter Card would work for me.

It cute to have a credit card on mobile phone. I wish it ll be introduce in Nigeria.

I did a research project on RFID tech.and found it quite scary the ease with which thieves can work their way in. Honestly, I’m a tech person but when it come to this technology specifically, you gotta show me you got me secured if you want me in; and so far that has not been the case.

I would love everything to be consolidated into a cell phone. But the problem arises what happens if I lose my cell phone? Or lose my cell phone in a remote place with no money what so ever? How would I do anything? I think it’d be a safety net to have two things the phone and the wallet, though if I can consolidate everything into 1 device that’d be nice as well especially in situations when I’m in a hurry or just can’t find my wallet in my room (which tends to be messy).

I’m all for speeding up transactions. Target uses card scanners that look the same as everywhere else – but they get approval at least twice as fast as everywhere else.

Combine using my phone instead of fishing out a credit card with Target’s extra fast back-end processing and you’ve got the best solution.

It’s hard to believe some stores still use a dial up connection for every approval. It says, “We don’t care about our customers or their schedule.”

it an extremely inscure way of getting just the same result

current cell phones are no longer phones, they’re portable computers with a built-in phone peripheral, and increasingly always-on-line

so the barriers to hackers and the level of reachability are orders of magnitude worse compared with the current system

Christopher Garland-Smith April 11, 2009 · 6:51 am

Fantastic!! and about time.

I’d love it if my phone came with a fingerprint scanner

yes I ant I am a college student and I have been hearing about this for a few years and do want it to all those that complain about the wireless security look at your current credit cards and see if it says paypass or i forget the other name for it but many cards already have rfid chips in them and these are less secure.

As a middle-aged guy who’s had sciatica, I think anything that can get the plastic out of my wallet is a great thing. Now, if I could just get all of the card — VISA, MC, Discover, AMEX, supermarket loyalty cards, AAA, etc — onto the phone, then I’d be set.

Why not make the whole transaction paperless? You swipe your cellphone and then the receipt gets sent to you in electronic form.