Are smartphones the credit cards of the future?
An image of Jack Dorsey's Square system.
JEREMY HOBSON: Three of the nation's largest cell phone companies are launching a test run for mobile payments in Salt Lake City. AT&T, T-Mobile and Verizon will let riders of the Salt Lake City transit system pay for tickets with their phones in the hopes that we can all pay for all kinds of things with our phones soon.
For more on mobile payments let's bring in Marketplace's Steve Henn. He's with us from Silicon Valley. Good morning.
STEVE HENN: Good morning.
HOBSON: So this seems like a no-brainer Steve. I mean my maps are on my phone, my email's on there. Why shouldn't my credit card be?
HENN: Well, people have been paying with mobile phones in Japan and Europe for ages. So the technology's all there. The biggest problem in the states is that there are literally millions of retailers who would have to buy new credit card processing machines that could talk your phones before this could happen. And they're worried about fees and those fees going up. So you know, it's a huge market, lot's of people want to crack it. There's something like $3.5 trillion in payments made each year with plastic, but getting the retailers to spend the money, to buy new machines is the big hurdle.
HOBSON: And who are the players, Steve, who want to get into this game of mobile payments?
HENN: Well, you know at times it feels like pretty much everyone. Google, Apple possibility could get into it. They're start ups like Bling Nation, established companies like VeriFone. Even Jack Dorsey, the co-founder of Twitter has a start up that would turn a phone into sort of a virtual cash register. His company is called Square, and Dorsey thinks within a generation, cash could almost disappear.
JACK DORSEY: I use cash less and less. For instance, I locked myself out of my apartment last night. And I was expecting to have to go rumble up some cash and go to the ATM, but I was delightfully surprised that my locksmith took Square. So I could just pay with my credit card and it was completely secure.
HOBSON: Completely secure he says Steve. But obviously that would be a big question: Is it going to be secure to use your phone as a credit card?
HENN: Well, that is a big question. You know, and it's one of the biggest challenges for the industries. Dorsey's company Square has been accused of being hackable by people who can convert his little credit card reader into a machine that would just steal your credit card information. Cell phones generally are pretty insecure devises. They talk to lots of different things, wireless networks and cellphone towers. And security experts I've talked to said this is really going to be the biggest challenged for this industry -- figuring out how to really lock down a cell phone and make it safe.
HOBSON: Marketplace's Steve Henn joining us from Silicon Valley. Thanks Steve.
HENN: Thank you.