by Michael M.

Do you know where your mobile phone is right now? Of course you do. You may even be reading this on your phone. And when you go to sleep at night, that phone probably sits on a bedside table less than an arm’s reach away.

Many of us see our mobile phone as the only thing we need to go about our lives. Wake up in the morning, check our appointments, send out emails, select a restaurant for dinner tonight and make a reservation, listen to music, find the nearest Starbucks, and, by the way, pay for our venti latte with our phone, too. At any given time we are more likely to know the whereabouts of our smartphone than where our wallet or purse may be.

More and more U.S. consumers are beginning to think of the mobile device as a wallet.

We can use the Chase mobile app to deposit checks directly into our account without going to an ATM or a bank branch. Bank of America, Citibank, ING Direct, and TD Ameritrade help us check our bank balances, sending an alert when our balance dips below a given level. Our mobile phones enable us to reimburse a friend for our share of last night’s drinks, pay bills, even buy a soda and fries at McDonald’s by simply tapping our phone on the checkout terminal.

Use of mobile payments in the U.S. is likely to surge in the near future, with the introduction of a tiny microchip that is beginning to be embedded in U.S. payment cards. The EMV (Europay, MasterCard and Visa) chip is already in use on 1.3 billion cards in more than 130 countries. Where it is in place, fraud on lost and stolen cards has fallen dramatically. Furthermore, the brains and memory of this chip will enable consumers to store multiple debit or credit cards on their mobile phone, receive and store virtual coupons, and, thanks to NFC (near field communications) contactless technology, check out at that Starbucks in less time than it takes to blink.

MasterCard and Visa are now making a concerted effort to migrate electronic payments in the U.S. from magnetic stripe to the smarter, more secure EMV chip. So a few years from now, mobile payments may be as prevalent in the U.S. as they are in Kenya. EMV chip technology will benefit everyone in the payments ecosystem:

• Because of the security of the chip, consumers are likely to switch their primary payment vehicle from card to phone. The ability to choose from several accounts, receive and store offers and coupons from merchants, check out by just tapping, or commute via mass transit with a wave of the phone are all bound to boost electronic payments. 
• Banks will see a reduction in counterfeit fraud and lost and stolen cards, and with greater acceptance, contactless NFC technology, and the opportunity to add value with loyalty and other applications, banks will earn more revenue by capturing more of consumers’ spending.
• Merchants, too, will see reduced fraudulent transactions, as well as more sales, due to the convenience and security of chip-enabled payments. They can also deepen customer relationships with targeted, even location-based offers, immediate delivery and redemption of coupons or discounts, and other loyalty programs.