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Visa has announced a contactless payment system for the iPhone which allows you to use the phone as a credit card. It works using RFID tech, and is as kludgy as hell.
Called In2Pay, the payment method uses a modified microSD card with a near-field communications (NFC) chip inside. Because the iPhone doesn't yet sport a microSD slot, the card sits in a case which powers the chip and allows contactless payments, just like those used to pay for toll booths or public transport. You would be able to hold your iPhone up to a compatible reader and make a transaction. It would work even if there were no clerk present, for instance at a vending machine.
The idea of schemes like In2Pay is to free you from carrying a wallet, allowing you to do everything with your cellphone. But this implementation, which requires carrying a cellphone case, is not much different from just taping your credit card to the back of your phone. (Or slipping it into a credit card-holding iPhone cover.)
It also requires a compatible card reader. What, the neighborhood restaurant doesn't accept contactless payments? Sorry, there are only 100,000 merchants in the U.S. that have NFC payment readers, compared to millions that accept old-style credit cards.
However, it does come direct from Visa, lending a certain weight to the scheme, and when more phones accept the microSD it will be essentially invisible. Add to that the fact that iPhone users tend to be more disposed to trying out new tech and you can easily see that this is a pilot scheme from Visa designed to grow the infrastructure of contactless payments, which have so far failed to meet Visa's inflated expectations.
In2Pay joins several methods for receiving credit card payments, including Square, a little white cube that slots into the iPhone's headphone jack and allows you to swipe regular old credit cards. Soon, it seems clear, almost all payments will be made using cellphones, even the ones that involve paying your friend back that dollar he owes you. Just don't lose that phone.
DeviceFidelity Announces Mobile Contactless Payment Solution for iPhone [Visa via MobileCrunch]
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