A change is on the horizon that could further integrate our cell phones into our daily lives. Our phones are already smart enough to remind us of meetings, send and receive email, watch videos, and look up information on the Web, not to mention occasionally make actual phone calls, but soon, mobile phones could also become the newest version of a debit card. The big cell phone companies are talking about adding a payment chip to cell phones that would be linked to a bank account and deduct purchases without having to bring out cash or a credit card. Science fiction becomes current reality.

The program looks like it will work the same way as MasterCard’s PayPass. Payments would be processed electronically, deducted from the purchaser’s account, and credited to the seller’s account. Stores would need to purchase specific terminals to process transactions within the new system, and cell phone users would need to link an account for their cell phone paid purchases. Apple has the grass-roots of a competing system with the iPhone, and Google’s Android phone is reportedly able to use a service called Checkout. According to the Wall Street Journal’s August 3, 2010 article entitled, “‘Pay as You Go’ Takes On New Meaning”, Visa and MasterCard are in the process of developing programs to process payments through cell phones,

The interesting aspect of the program could be the marketing potential of such a service. If a store using the cell phone pay terminals is able to collect phone numbers with sales transactions, a new business-specific database of customers could be established. Using the database, marketing programs could be created to send ads for the store or the product purchased directly to the person’s cell phone. How could marketers use the data to better understand individual or aggregate buying patterns?

Though the phone-as-payment idea is gaining traction, it still has a few hurdles to clear before it can become a reality, including widespread acceptance amongst cell phone users. But the potential is very strong, and the reality of such technology is probably not far off. Though flying cars may still be science fiction, cell phone payments are a technology that could be just around the corner.