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Marvels of Modern Technology: Smartphones as Credit Cards


According to Digital Trends, last February at the White House Summit on Cybersecurity and Consumer Protection, CEO Tim Cook declared that Apple Pay has brokered a deal with the federal government for its payment services, such as veteran’s benefits. Cook also asserted that Apple Pay will encompass everything, even personal identification, that is carried in purses and wallets. He guaranteed all personal data will be fiercely protected and then explained the wave of the future is to use smartphones as credit cards.

The Skinny on Smartphones as Credit Cards

In 2012, Creditcards.com conducted a poll which revealed that by 2020 the need for paper money and plastic credit cards will be reduced drastically if not eliminated entirely because of the use of smart phones as credit cards. The first mobile credit card reader was introduced by Twitter founder Jack Dorsey. Known as the Square, it is a tiny piece of equipment that is inserted into the audio slot of a smartphone. It also includes an area where a credit card can be processed manually. In conjunction with the company’s application, the data is transferred to the parties involved in the transaction through sound waves into the smartphone.

Apple Pay, however, works a bit differently. According to Apple Insider, Apple Pay implements a practice called tokenization. Rather than the credit card number being transferred through the credit card company and merchant during a transaction, using a smartphone as a credit card will pull up the necessary information that has been saved and the credit card number will be supplied with a one-time security code that is applicable only for that transaction. The company feels using smartphones as credit cards is more secure than using an application, processing credit cards in the traditional sense or making online purchases because no one ever receives the real information. In fact, Apple Pay is progressing like wildfire as the company confirmed with the New York Times before last Christmas it has partnered with nearly 90 percent of existing credit card companies. Apple Pay will launch in the United Kingdom this week and almost 300,000 businesses are already partnered with the company to accept the use of smartphones as credit cards.

What Apps Work the Best to Use Smartphones as Credit Cards?

Since not everyone in the world has an Iphone, there are payment apps available to use smartphones as credit cards. Square and Pay Anywhere are the best of the bunch as their apps are free, the equipment is easy to use and once the registration process on their websites is complete, a card reader is sent to the customer free of charge. There are no hidden costs, contracts or additional requirements except Square does receive 2.75 percent of each purchase and the fee increases to 3.5 percent if the card number is manually entered rather than swiped. Each transactions costs the user approximately 15 cents. Pay Anywhere is very similar to Square, including how to sign up and the receipt of the equipment to plug into your phone. Pay Anywhere’s fee structure, however, is different from its colleague as it collects 2.69 percent for each purchase and then 3.49 percent for transactions that are manually entered. It’s fee for each transaction is a bit higher than Square’s as it is 19 cents.



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