Coming Soon: The Credit Card Cell Phone

You’re probably familiar with SpeedPass, even if you didn’t have one. SpeedPass was a simple concept; an RFID  tag inside a keychain attachment that you waved in front of the Mobil gas pump. It recognized you by your keyring and were charged accordingly. No credit card needed, since your card was already registered to your SpeedPass key.

Well, ViVOTech is looking to bring that same kind of rapid payment method to your cell phone. After years of development, it has begun to strike deals with credit card companies and retail outlets to support cardless and contactless purchases, just by waving a cell phone.

RFID is expected to take off in a big way. There have already been 20 million credit cards issued with RFID chips, allowing for purchases without having to manually hand over a card, according to Mohammad Khan, president of ViVOtech. But he thinks there’s even more security to be had with a cell phone than a credit card.

“If you lose your wallet, you have to call all of your credit card companies individually. If you lose your cell phone, you just call that provider and they can turn off the phone and all of the cards programmed into it in one step,” he told

Khan believes the real power is in the cell phone. Market research firm ABI Research agrees. In a report in May 2006, it predicted that more than 50 percent of cellular phones would have some form of contactless purchasing power by 2010.

“Contactless commerce is on a steep growth curve, but cards are only an intermediate step,” wrote Erik Michielsen, director of ABI Research’s RFID and M2M practice in the report.

RFID-enabled credit card phones will be able to store multiple cards, and the user can choose which card to make a purchase at the point of sale. ViVOTech is going for a variety of markets and wants to be in places like stadiums, cabs and movie theaters.

An RFID-based credit card system is inherently safer than credit cards with magnetic strips, Khan argues, because it’s not worth it to break an RFID chip security for a card with a few thousand dollars of credit limit (although there are concerns over RFID security).

“There’s a high level of security built in. The computer chip on that card is enabled with a card issuer key with encryption in the chip. You cannot copy the data inside the chip. To break the encryption would cost a half million dollars. The effort to break in is so disproportional it’s not worth it,” he said.

Plus, for added security, the 3-digit CVV number usually found on the back of your credit card changes every time you use the RFID phone.

ViVOTech claims to have working agreements with most of the major credit card-issuing banks, and that it is working with Nokia, which is an investor in the company, Motorola, Samsung, LG and Sony-Ericsson. All of these companies will have multiple models of phones with the RFID credit chip available by the end of the year.

Right now, ViVOTech is engaged in regional pilot programs around the country, using credit cards with its RFID chip. Khan said the company expects to go national in 2008, and by Christmas of 2008, multiple models of phones will be available to make purchases at many retail outlets.

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