Barcode scanning using either scanned jpgs or an image from the camera

Near Field Technology such as Barcode scanning on the iPhone and Credit Card trasactions

http://iphone.macworld.com/2008/05/iphone_cleans_out_your_wallet.php

This describes an approach...scanning the physical credit card card; but I have seen articles on using the camera in the phone to take an image which is sent to a web page which interprets the bar code.

But what I want is an near field technology function which will allow the phone to be used instead of a credit card.

MasterCard Paypass using near field technology can accept interactions with cell phones. http://www.bloggingstocks.com/2006/12/15/cingular-to-test-nokia-wallet-phones-with-mastercard-paypass/

MasterCard Teams with Motorola to Test PayPass for Cell Phones

(Digital Transaction News)

MasterCard International announced today it will launch pilots of its PayPass electronic payment system on mobile phones from Motorola Inc. The Purchase, N.Y.-based card company says the pilots will get under way at a "variety" of unspecified locations in the U.S by the end of the year. The Motorola phones in the pilots will also feature a technology called near-field communications, which will enable them to perform electronic functions beyond payment. These might include mass-transit ticketing, loyalty, or interactive marketing.

MasterCard expects NFC capability, while not necessary to PayPass, will make the phones more economically attractive to cellular carriers, which will be expected to distribute the phones to consumers. PayPass relies on radio-frequency identification technology to interact with payment terminals and, except for a pilot in Dallas that involved Nokia cell phones and ended last November, it has been based on cards and keyfobs as form factors. "The real issue [with cell phones] is a commercial one," says Oliver Steeley, vice president of wireless payment devices at MasterCard. "Banks don't buy cell phones, cellular carriers do. So we have to construct something here where there's enough to make it worthwhile for cellular carriers to pay for the phones because they won't come free. That's why we introduced NFC." Steeley says the added functionality of NFC including should help drive data revenue for carriers and justify the investments they make in the phones. The phones, for example, might allow users to pick up links to carriers' WAP sites merely by waving the phones near posters, labels, and the like.

Steeley says the new pilots with Schaumburg, Ill.-based Motorola will "take PayPass to the next level," building on what MasterCard learned in its Dallas pilot last year. One change from Dallas will involve the absence of snap-on back plates. These plates, rather than the phones themselves, communicated with readers in that pilot, but cell phone design changes make such solutions unrealistic for "large implementations," says Steeley. "Cell phones change shape and size," he adds. "At the start of the pilot we chose Nokia's best-selling models, but at the end it was difficult to get consumers to participate because Nokia had introduced 14 or 15 new models, and some didn’t accommodate the back plate." In the trials with Motorola, the transmitter will reside in the phone itself, and consumers will activate PayPass by logging into their banks' Web sites and entering identifying data about the phone. The banks will then download account data and cryptographic keys to the phones over the airwaves. The phones will be usable as payment devices wherever PayPass readers have been installed, though there are "several specifics still under discussion" with Motorola, Steeley says. He says MasterCard hopes the new pilots will reveal, among other things, how cell phone and card life cycles compare and how transaction activity on the phones compares with that on other form factors. MasterCard says its research has shown that consumers who like contactless payment tend to prefer cell phones as the form factor, owing primarily to their convenience and the fact that consumers usually carry them with them everywhere.

Though the card network is not releasing specific locations for the pilots yet, Steeley says they will most likely occur where PayPass acceptance has already been implemented. "We want to coordinate issuance with acceptance," he says. So far, the biggest implementation of PayPass has occurred with McDonald's Corp., which announced in August it would install the payment system at 715 stores in New York, Dallas, and Orlando, Fla., later this year (Digital Transactions News, Aug. 18).

With PayPass, cardholders tap or wave cards or phones on or near a receiver linked to a point-of-sale terminal. McDonald's, whose PayPass implementation represents the first commercial rollout of MasterCard's technology, is using a terminal from VeriFone Inc., the Omni 7000. An antenna embedded in the form factor transmits encrypted card-account data to the receiver, and the transaction then proceeds as if a card had been swiped. Radio-frequency, or RFID, transactions have been found to result in faster transaction times than swiped and signed transactions, making them attractive to retail venues like fast food, where tender time is critical. All the card networks are targeting the quick-serve market, which accounts for some 6 billion cash payments annually. American Express Co., which is conducting a test of similar technology in Phoenix, says its ExpressPay system cuts tender time to 8.9 seconds, compared to 12.4 seconds for cash and 15.3 seconds for signature-based debit. RFID also promises to help convert small-value transactions to electronic processing. In its Orlando pilot, MasterCard found that tickets average $21 with PayPass, with 45% of the payments coming in under $10. "Right now we're very focused where we believe the transaction is large enough to be economically sustainable [given interchange and other fees], places where we're getting a share of transactions and want to get a larger share of transactions," says Steeley.