One of the technological trends last year was the use of mobile payments. For marketers it meant an additional way to provide customer services and encourage purchases; for users it meant convenience and simplicity, both very appealing characteristics. The term “mobile payments” is self-explanatory: consumers are now able to use their smartphones to make purchases. It’s generally assumed that the majority of people carry their mobile phones on them all the time. Another thing that you usually carry with you is your wallet. Companies are now trying to provide a need that most users weren’t even aware of. Will this new technology affect our future purchases?

The technology called NFC (Near Field Communication) is a mobile payment system that allows users to make purchases by simply tapping the phone or waving it in front of a compatible payment terminal. In order for the system to work, the communicating devices should be near each other due to its short range.

Who is using the technology? One of the major players is Google. They introduced Google Wallet last year and have partnered with Square to get a mobile payment strategy advantage. Square uses a small credit card swiping device that can be connected to smartphones and to the iPad. According to Mashable, more than $66 million worth of transactions have been made with Square in the first half of last year.

Another big player is PayPal. PayPal is already considered a reliable online payment system, so it’s not really a surprise the company is one of the first to invest in the new technology. The company even stated that it expects “the wallet to be dead by 2015.” Supporting this view, PayPal acquired Zong for $240 million to ensure their future in mobile payments. Acquiring Zong was a very smart decision as the company has a large contact base: more than 250 cellphone networks in 45 countries. And paired with the millions of user accounts that PayPal has, this combination can be a recipe for success.

However, the technology that PayPal uses differs a bit from Square; it’s a more integrated system, rather than using an additional plug-in device.

Even though these companies are very confident in the use of mobile payment systems, consumers are often reluctant to share valuable data (like financial info). Google Wallet has received some negative publicity regarding the technology they use. Security firm Zvelo discovered a flaw in the Google Wallet PIN (a confirmation code that consumers need whenever they make a purchase). They found that the code could be cracked, which leaves room for criminals to abuse personal data. The PIN information is stored on the phone and not the NFC chip and this means that it doesn’t have a high security level. According to, you’re probably not at risk unless you have rooted your mobile device. And even if you did, you only need to take a few extra security measures to be on the safe side again (e.g. setting your phone’s lock screen).

Google predicts that by 2014, 50% of mobile phones will use NFC technology. And as Apple is selling the Square plug in readers, Google’s prediction might come true. However, in order to succeed the companies and investors involved will have to promote the systems to the public effectively and emphasize the benefits and security guarantees. But given the fact that giants like PayPal and Google have invested in the technology can only mean that they’re confident in the future payoffs.

Will you try the new technology or stick to carrying your wallet with you?