A phone company is on the cusp of urging its customers to leave their credit cards at home and instead spend with their phone, using the new "digital wallet".
Vodafone has started a New Zealand trial of its SmartPass digital wallet application with about 150 people, which it expects to be the last step in proving the system before it is made available to customers within three months. A similar trial is under way in Australia and the company has said SmartPass would go live in Spain by the end of this year.
New Zealand rival Telecom - which is working with Vodafone and others to develop some of the infrastructure for a digital wallet and ran its own trial last year - says it will be several months before it can "talk more openly about our digital wallet plans".
A digital wallet is just the start. Backers of the idea talk boldly of shrinking your card-stuffed wallet even further by adding phone apps for vouchers and loyalty cards.
Vodafone has hooked up with Visa and the Bank of New Zealand for the trial of the telco's SmartPass phone app. It can work on Galaxy S3 and HTC one Android-based smart phones - they have the necessary near-field communication technology (NFC) built in, allowing them to communicate with the 10,000 tap-and-go eftpos terminals now in use.
Vodafone consumer director Matt Williams said it was hoped the next Apple iPhone would incorporate the necessary technology too.
Vodafone estimates there are about 250,000 NFC-capable smart phones in use in New Zealand. A new SIM card is required too, with the app, which will be available from the company at no extra cost.
Visa and MasterCard credit and debit card accounts can be loaded on to the phone, followed by transfers of at least $20. A maximum of $2,000 a month can be spent from the card.
To make a purchase, open the app, touch the big button on the screen, place the phone on the tap-and-go terminal, wait a moment, remove the phone and touch the big button again. A PIN for the "virtual credit card" is selected when setting up the system and this must be used for transactions over $80. A separate PIN, for the application, can be used with smaller purchases if the user chooses to set it up this way.
Using SmartPass does not incur any additional transaction fees. At yesterday's announcement of the trial, Mr Williams emphasised the simplicity of SmartPass, especially for small purchases such as coffee. "We expect to see NFC smart phones eventually replacing all the cards we carry in our wallets right now."
It seems hard to beat the simplicity of cash for purchases under $5. However, a survey in June found half of younger adults who had tap-and-go cards, for which a PIN isn't needed up to $80, preferred this form of payment over cash.
Technology commentator Peter Griffin, who speculated cash would fall out of use within two decades, said there was hot international competition in the digital wallet market.
"There's a big rift emerging between the new technology players (such as Google) trying to get into digital currency and the traditional players like Visa, MasterCard and American Express."
• Download SmartPass application
• Load credit/debit card details onto phone
• Transfer credit into phone
• Phone now works like a credit/debit card
• Can be used only at business that have tap-and-go terminals
• PIN required for purchases over $80