“Hold On. My Credit Card is Ringing.”

These days, it seems as though a smart phone can do anything. And, with coming versions of Android and other mobile operating systems, your smart phone might even be able to act as a credit card.

Recently, Google CEO Eric Schmidt unveiled a phone outfitted with a near-field communications chip. This is the sort of technology similar to (but not the same as) the RFID that allows many to simply wave some credit cards in front of a card reader and proceed with their transaction -- no swiping required. With near field communications, reports Digital Trends, your credit card transactions could be even more secure:

A near-field communication chip allows wireless data transfers, similar to RFID chips in some credit cards, but more secure because of the short range (4 centimeters) of the device. Standard credit cards use a magnetic strip that users swipe across a reader.

The move would make it possible for you to eschew plastic altogether and simply carry your phone around with you, waving it in front of compatible readers at stores, gas stations and even restaurants to complete transactions. For some, this sort of convenience is likely to beat out the chip and PIN set up that is being pushed for security here in Canada.

Will Phones as Credit Card Catch on Soon?

Google's foray into credit card technology could provide yet another boost for Android phones. Android mobile usage has been growing -- even as other mobile usage declines. You can look at the following chart from WebDevelopersNotes.com and see how Apple mobile products and Android mobile usage are on the verge of intersecting:

With this increase in Android mobile usage, it could become commonplace in the future for everything -- including paying for groceries at the store -- to be accomplished using a smart phone.

However, there are some barriers to the immediate and widespread adoption of near field communications technology. The technology has been used in Japan since 2004, reports ComputerWorld, and it appears that its adoption in the U.S. continues to be an uphill battle:

"It will be many years before you see this [mobile payment] technology moving into the mainstream, although within a decade there will be significant volumes of users in the U.S. and more outside the U.S.," Bob Egan, a mobile payments analyst and founder of The Sepharim Group, told Computerworld.

For now, Americans have a lot of other payment options, and there is no need to use a smart phone as a wallet -- especially when those smart phones can cost hundreds of dollars. And then you start paying for the phone and data plans. How many in the mainstream are ready to purchase such an expensive credit card? It's a worse deal than the Kim Kardashian debit card.

Privacy and Your Smart Phone Credit Card

Another issue with the adoption of such a payment option is the concern over privacy. Google has already shown itself adept at gathering information about you and then tailoring it to fit your needs. Consumers already have limited financial privacy; what happens when Google can all of a sudden access all of your payment information, your buying history, and where you happen to be (thanks to GPS tracking) at any moment in time? Could the information be used to update your credit history and FICO score in real time? Could you be denied a loan because your credit score dropped because of a purchase you made just before going to see the loan officer?

In the end, it remains to be seen whether this technology, led by Google and Android phones, becomes mainstream. Credit card companies are already interested in this technology, and you could be seeing it with your more conventional cards. If near field communications and credit card payment does come to your smart phone, though, you will have to be even more protective of it. Imagine what an ID thief could do with a device that can access your finances with a wave of the hand.

Image source: Hari Prasas Nadig via Flickr

This post was included in the Best of Credit Cards and Saving Money at www.cardwisdom.com