The smartphone is the new wallet

Woman holding phone

Your smartphone is about to become a contactless payment device, meaning you'll be able to pay for everything from your groceries to your meals without using cash or credit cards.

This is thanks to the wonders of the near-field communications chip and Isis, an unprecedented joint venture by mobile phone giants AT&T, T-Mobile USA and Verizon.

Service tests are planned for early 2012 in Austin, Texas, and Salt Lake City.

Among the thousands of apps that accompanied the explosion of smartphones during the past couple of years, one has been conspicuous in its absence: contactless payment, a way to transmit currency or information electronically over tiny distances from one device to another.

Sure, you've been able to tap and go for years if you had a chip payment card and a merchant with the terminal to read it. But not from your smartphone.

That all began to change this summer when Google Inc.'s Nexus S Android became the first NFC smartphone to test U.S. waters.

The Nexus S Android, which is linked to the Google Wallet mobile payment service, launched a pilot program in New York and San Francisco with pilot partners Citigroup, MasterCard and Sprint Nextel.

The Isis project will make it possible for you to load your choice of credit and debit cards onto the mobile wallet app on your NFC smartphone. Nokia and other smartphone makers are already hardwiring support for NFC apps into their future models.

"The handset pipeline around NFC is basically just about to explode," according to Jaymee Johnson, who heads up marketing for Isis. Juniper Research estimates that one in five smartphones will have NFC functionality in the next three years.

For NFC payments to take off, there must be enough consumer demand to convince merchants to invest in the contactless terminal upgrade.

To speed up that process, some companies have devised "bridge" products.

DeviceFidelity offers two: an external memory card with an NFC antenna that can be inserted into some smartphones or placed into a special case for handsets like Apple's iPhone that lack sufficient room inside.

Getting Isis up and running is only the first step. The consortium is already hard at work developing functionality to support card issuer and merchant programs.

While I count myself a first adopter on most electronics, I've been tentative on smartphones, unconvinced so far that their true usefulness matches their hype.

But tap-and-go payment might convince me to take the plunge.

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