Free range cash has several drawbacks. For the user, carrying a wad of cash can be hazardous; for banks, cash is cumbersome and offers no opportunity to charge interest; to the merchant, paying cash turns buyers annoyingly frugal; for the government, cash greases illicit business operations.

Credit and debit cards are better, but still require a physical item that can be stolen, scratched or altered.

In a digital age, therefore, you should expect a digital solution to transactions, and it looks like it might come in the form of the cell phone.

For years, we've read about the Japanese using cell phones to make purchases, and the technology has been proven in tests in the United States. However, the concept has advanced at a snail's pace thanks to the crowd of companies that all feed from the same bowl of credit transactions.

At the moment, the major credit card issuers, banks, and merchants hold their places in the daisy chain that leads from the customer to his bank account. What incentive do they have to cut cell phone carriers in on the action?

The answer must be increased business. The American mantra for decades has been "less hassle means more spending." New tech such as Visa's payWave already allows credit cards with microprocessor chips embedded within to be accessed by readers with a simple wave-by.

The same and more elaborate technology could be built into the cell phone, if the numerous parties involved in the processing could learn to play well together. According to Key Pousttchi, an expert interviewed by the New York Times, however, the complexity of the problem means that widespread implementation of cell phone payments is still years away.

In the meantime, a number of companies are finding other ways to turn the cell phone into a useful financial tool.

Obopay will turn your cell phone into a sort of debit card you can use to transfer money from person to person. You deposit funds into your Obopay account from your bank or credit card, then use your cell phone to pay debts or send money, which Obopay withdraws from your account.

There is no charge to sign up with the company or get money, but you'll pay 1.5% to transfer cash to your account from a credit card. Of course, Obopay also benefits from the interest it can raise on the cash you have stashed in your account.

Zong is a service that allows cell phone users to charge purchases to their cell phone account rather than a bank account. The key here is the number of participating vendors, and since, according to Zong, "a carrier can charge you [the merchant] anywhere from 25 to 50% of the sales price" for these purchases, don't expect to find this service accepted at your local Wal-Mart. It seems most applicable to online gaming and other small transactions.


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