Use a cell phone as a credit card

Radio technology will soon do another consolidating act and
remove an apparently extraneous "device" from your pocket:
Your wallet. Or at least your credit card. If you're the type
who never leaves home without your cell phone, you'll
automatically have a credit card or debit card with you
wherever you go thanks to an improvement on standard RFID
technology called near-field communication, or NFC.

The NFC mobile-payment application is currently in trials in
the United States, Germany, Finland, the Netherlands and
a few other countries, with transportation ticketing as
a primary use (think SpeedPass on a cell phone). The idea is
that you just touch your phone to an NFC reader (or bring it
to within a few centimeters), and it acts just like the
credit card or debit card you use right now.
A mobile-payment-enabled phone is associated with a bank or
credit-card company just like it's associated with
a phone-service provider. The technology is similar to the
RFID (radio frequency identification) transmitters used in
contactless credit cards, except that NFC chips allow for
two-way communication instead of only one way, which is
supposed to make for a more secure payment method.

The technology behind NFC, like RFID, uses inductive coupling
to transfer data. Induction occurs when a wire (or any other
conductor of electricity) passes through a magnetic field,
generating an electric current in the wire. It's similar to
the principal of electromagnetism -- that passing an electric
current through a coil of wire will generate a magnetic
field -- only in reverse. An NFC chip has a coil of wire
built into it, much like an RFID chip. When an NFC-equipped
cell phone gets to within a few centimeters of
an NFC-equipped payment station, which is generating
a magnetic field and also has a coil of wire inside,
an electric current jumps between the two coils of wire,
signaling data-carrying, short-range radio waves to pass
between the two devices.

Unlike the RFID tags in contactless credit cards, which only
send information when asked for it, an NFC chip can also
receive information. So when an NFC phone gets close to
an NFC payment station, it can have a two-way conversation
with the payment station. Instead of simply sending your
name and credit card number when the data is requested via
the circuit, the chip can have a conversation with the chip
in the requesting device. It can say, for instance,
"Not yet -- wait until my owner enters a password on my
keypad." The pay station will then say, for instance, "Okay,
I'll wait," and the devices will keep the connection open
until the phone approves the transaction and sends the data.

Nokia revealed the first fully integrated NFC phone, the
Nokia 6131 NFC, at the 2007 Consumer Electronics Show (CES)
in Las Vegas. At CES, Nokia was in a perfect position to show
off what some in the industry consider to be the myriad other
applications for an NFC phone -- like sucking data off
an NFC-equipped business card and downloading data from
an NFC-equipped kiosk. The NFC chip is embedded underneath
the cover of the phone. According to the NFC forum, you could
also use an NFC phone to unlock the door to your house and
synch your phone calendar with your PC calendar.

The 6131 NFC is in trials in New York City as of January
2007. Nokia says it should available to consumers by March.
No word yet on which stores or transportation venues will be
equipped with the sta­ndardized NFC readers.