New Technologies May Make Credit Cards Obsolete

Gabe Hernandez, The Monitor/AP

NEW YORK -- Visa and MasterCard are introducing Internet-based technologies to make it easier for shoppers to buy things at retail stores without pulling out a credit card.

The two technologies, announced separately Wednesday, will give merchants and banks more options for incorporating so-called contact-less payment systems into their mobile apps. The customer uses the app to make purchases by tapping the phone to a store's card reader.

The technologies tap a new feature in Google's (GOOG) Android operating system. Before, card information had to be stored on a secured part of the phone. Now, it can be stored remotely instead. A retail or banking app on the phone then retrieves what's needed to complete the transaction.

Visa (V) said it will provide app developers with a complete service, with card information stored on Visa's servers.

MasterCard (MA) said it will publish technical details by the end of June to help companies use the new Android feature, known as Host Card Emulation.
MasterCard said it has been testing the technology with two major banks, Capital One Financial (COF) in the U.S. and Banco Sabadell in Europe.

"The use of HCE provides a very attractive way forward to launch an increased number of NFC-based offerings," said James Anderson, MasterCard's group head for emerging payments, said in a statement.

Visa and MasterCard are both targeting phones that have a wireless technology called near-field communication. Many Android phones have that, and the remote storage capabilities come with the Kit Kat version of Android, which was released last autumn. Apple's (AAPL) iPhones lack NFC, but cases are available to enable that technology.

Visa said it will make tools available for app developers to incorporate payment capabilities. The customer can then use a smartphone instead of a plastic credit card at stores, transit systems and other places that accept contact-less payments.

The hope is to encourage greater use of contact-less payments, which experts say offer more security protections than plastic. The card number is stored in encrypted form and can be easily disabled remotely if a phone is lost or stolen. Mobile systems also permit easier use of one-time card numbers, which won't work for additional transactions and are useless should a merchant's computers get hacked.

Sam Shrauger, Visa's senior vice president for digital services in developed markets, said having payment information on remote servers is cheaper and easier to operate than using the phone's hardware.

With hardware-based systems, he said, wireless carriers and device makers sometimes restrict what can be done. Many U.S. carriers had blocked or made it difficult to get Google's NFC-based Wallet app, for instance, as they were developing a competing system, Isis.

Visa and MasterCard made the announcements ahead of the Mobile World Congress wireless trade show, which takes place in Barcelona, Spain, next week.

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Thieves will find a way to steal your money no matter what.

February 19 2014 at 9:37 PM Report abuse rate up rate down Reply

I will just use cash. I don't have a smart phone as I am still using my original little silver flip phone with the original battery. Works great and it only cost me $9.99 a month until my hubby changed our data plan after he retired. Now MUCH more expensive for the same dang service! I am sick and tired of these corporations' money grabbing greed. The less 'stuff' I have, the more enjoyable my life. And the less money it takes to keep me happy. *smile*

February 19 2014 at 7:47 PM Report abuse +4 rate up rate down Reply
Saint Michael

Nobody ever hacked my money clip.

February 19 2014 at 7:07 PM Report abuse +2 rate up rate down Reply

One trillion now in credit card debt. Why? The American people, or the majority, have a negative savings rate and NO MONEY. This extraction method that may be adopted by the corporations will assure a streamlind debt servitude culture and economy. And it will all be labeled 'progress' by the likes of Gates and the hi-tech fascists.

February 19 2014 at 6:44 PM Report abuse +2 rate up rate down Reply

So let me see if I got this right........ we're no longer pulling out a small credit card but rather a hulking great phone whose battery just ran out............

February 19 2014 at 5:48 PM Report abuse +2 rate up rate down Reply
1 reply to sktn77a's comment

Yes, and of course to pay with the phone, you must pay for the phone service. It is financial rape anyway you look at it.

February 19 2014 at 6:44 PM Report abuse +5 rate up rate down Reply

cheapest does not mean the best or even half way good how does this company rate times will tell i guess however that might be just a mite late

February 19 2014 at 4:50 PM Report abuse +1 rate up rate down Reply