Credit Cards Will Go Electronic, Then Disappear Into iPhone 5

dynamics

Two bits of news chart the evolution and demise of that dumb piece of plastic in your wallet. First, it will get very intelligent. Second, it will disappear.

Push-button Dual Function Credit Cards

U.S. credit cards have changed little in the last forty years: Sheets of plastic are punched with identification marks, printed with security features and images, and a magnetic strip for electronic reading is laid on the back. Now Dynamics Inc. is producing a smart credit card that lets you pay at the point of sale with your  loyalty scheme points as well as regular money. 

The new card, dubbed Redemption, is being demonstrated today at the FinovateFall 2010 financial innovations convention in New York. Though the cards lack machine-readable chips, they do incorporate electronics inside the thin slip of plastic of the card itself. The cards incorporate two tiny membrane buttons so you can select which mode of payment you'd like to use, and there's even a pair of LEDs to let you know which you've pressed. The card then actually reprograms its magnetic stripe, so the retailer's machine doesn't have to do anything sophisticated. 

The solution is potentially more secure than "traditional" cards, since it's far harder to clone, and it expands the capabilities of point-of-sale systems at zero extra cost. Citi Bank has been trying the technology on a small scale, and will roll out a much bigger-scale trial starting in November. 

RFID Wireless Card Tech Hidden Inside iPhone Screen Circuitry

The Redemption card is a clever interim solution for expanding credit card powers, but it's going to be a temporary fix. RFID credit cards are on the way. RFID means you'll be able to pay wirelessly by waving a card over a panel at the point of sale—and in its most sophisticated version this will allow a store's computers to interact with your RFID-enabled smartphone, augmenting loyalty card points, and even uploading ads or apps to the consumer's phone automatically. If this gets adopted on a massive scale, the credit card as a physical entity is entirely defunct. Money becomes entirely virtual.

RFID typically relies on a spiral antenna inside the reader and card devices. The spiral can be thin, so it's easily hidden inside the paper of public transit cards in use around the world (though this makes the tickets susceptible to damage). Nokia plans to add antennas and RFID communications chips into its phones soon, and Apple has been patenting the heck out of the idea, but both companies were probably going to rely on an in-phone antenna loop. 

It seems increasingly certain Apple is going to bring RFID into common usage with the iPhone for 2011 (the iPhone 5) because there's a new patent that shows just how far Apple has gone with design thinking for RFID. The patent shows how an RFID loop, powerful enough to act as both RFID tag or a tag-reader, can actually be built right into the complex layered circuitry of the iPhone (or iPod Touch) screen. We know Apple is fond of highly-polished design and integration, and this innovation is no exception. The screen has to be exposed by its very nature, which is good for RFID purposes — the wireless signal is unobstructed by other bulk in the smartphone, and it frees up Apple to do what it likes with the rest of the phone's design.

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3 Comments

  • Benjamin

    One, this is not Apple leading the way, this is RFID technology leading the way. RFID has been around for some time now.

    Secondly, why is everything that does not have a chip inserted into it considered dumb. Credit Cards have a long track record of proving themselves of being a convenient method of carrying money and paying for goods. Theft exists and it will continue to exist, the new technology just might make theft that much faster and less intrusive that being mugged....

  • Joe Eanes

    Apple, Inc. is leading the way, yet again, into the future for American consumers. I wonder how long it will take everyone else to 'catch-up' and 'copycat'?

  • Tim Jones

    don't trust Apple's "highly-polished" design- the iPhone won't pay your bill if you're holding it at all