Bump For Cash: Phones As Virtual Wallets

The use of mobile phones to exchange money is a main theme at this week's wireless industry conference in Las Vegas. Last week, PayPal introduced an iPhone app that lets users pay for items by tapping their handset against another phone.

As Mario Armstrong tells NPR's Linda Wertheimer, the PayPal app is similar to the old days, when people with Palm Pilots used an infrared beam to share contact info between devices. Bump Technologies introduced software to simplify that process. The new app uses software from PayPal and Bump to let registered users conduct a transaction via their phones.

To prevent unauthorized use, the app requires a password for every transaction. But, Armstrong said, "as mobile payments and using mobile devices to pay for transactions rises, we will obviously see more types of security threats in this area."

So, with sophisticated phones that can use this software becoming more prevalent, will shoppers soon be tapping their phones against the cash register at stores, instead of using a credit card? That's already happening in some countries, from Austria to Korea, Armstrong says.

In the United States, Starbucks is running trials in some markets, allowing customers to use their phones as their Starbucks card. And Arkansas has become the first U.S. state to let people use their phones to pay for e-government services — everything from probation fees to property taxes.

As for Bump, Armstrong says he's given it a try — and he concedes that the idea of zapping real money around by using virtual gestures can take some getting used to.

But, he said, "the convenience is really incredible — the ability to transfer funds on the spot, or look at multiple accounts on the spot — to be able to have almost a virtual wallet at your fingertips."

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