Will Cell Phones Make Plastic Credit Cards Obsolete?

I recently stumbled across an article about a South Africa company introducing a cell phone based payment system to Cape Town, South Africa.

It’s got me wondering whether this type of mobile payment system will catch on in the United States.  While it would be nice to simply carry my cell phone rather than my wallet, I expect that it will take awhile for general acceptance. And until a system is created to carry my driver’s license on my cell phone, and I don’t feel the need to carry some emergency cash on my person, it is really attempting to solve a problem that I don’t have.

I wondered whether cell phone payments had been tested in the United States and after a little bit of research I discovered that a wireless payment sytem was tested in the Washington DC area in 2006 (explained here). It involved using an Radio Frequency Identification chip (RFID) in the cell phone to store credit card and bank information, which was read by a scanner at the check out counter. Major League Baseball has implemented a similar system to allow baseball fans to receive baseball tickets on their mobile phone and enter the park by displaying and scanning a bar code on the cell phone. Now that is something that I expect to catch on.

This Bankrate article from 2005 predicted that cell phone based payment would be a growing method in 2006-2008.  And while gas stations now frequently offer contactless transactions for those on the go, I don’t think it is nearly as popular as the author in the article would have predicted

But digital payment companies, such as Paypal and its competitors, are moving into the mobile payment space.  They are enabling persons to transfer money between cell phones numbers and authorize the payment of money through text messaging. As cell phones move to replace (or at least substitute themselves for) desktop computers and televisions as entertainment devices, there’s no reason that they couldn’t replace credit cards as well as the public becomes more comfortable with the technology and retail establishments begin to accept them.

What do you think?  Will cell phones make plastic credit cards obsolete?

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