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Death Of Physical Currency: Google Wallet and Near Field Communications

On Thursday, Silicon Valley titan Google is expected to announce a new mobile payments system at an event in New York City. According to Bloomberg, Google is teaming up with Sprint, a longtime Google partner and the number three wireless provider in the U.S. after Verizon and AT&T, to roll out a mobile-payments system based on Near Field Communication, or NFC, technology. The mobile-payments space is at an inflection point, according to Sarah Clark, editor of Near Field Communications World. In a phone interview with on Wednesday, Clark said that NFC could become the industry standard for mobile payments within the next year. Clearly there is massive interest in transforming, and disrupting, the existing credit-card industry and point-of-sale space. “We’re operating with 1970’s technology today,” Clark said. “There are all of these intermediaries, kind of like a spider’s web of connections until the final payment settlement goes through.” “The question everyone is asking is: ‘Is it possible to economically dis-intermediate Visa and Mastercard from the process, and thereby bring down transactions costs,” Clark said. Here’s an explainer on NFC technology. What is NFC? Near Field Communication technology is a short-range tool that operates on wireless frequencies similar to RFID chips and tags. It works by connecting a user’s mobile device, equipped with an NFC antenna or specially-programmed SIM or SD data card, to a receiver, usually a few feet away. The idea is that the consumer will be able to “wave” their handset when they’re buying something at a retail location. There are technical challenges with NFC, however, including the fact that it requires a antenna and a “secure element” in order to guard consumers’ purchases.

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