Cingular Testing Pay-By-Phone Service in NYC

By Ed Oswald, BetaNews

December 15, 2006, 1:51 PM

Although it may be five or more years behind similar capabilities in Europe, the US is finally getting technology that would allow consumers to use their cell phones as a way to pay for consumer goods. The first trial would be through Cingular Wireless in New York City.

The test is a result of a partnership between the carrier, MasterCard, Citigroup, and cell phone maker Nokia. Certain phones would be outfitted with MasterCard's PayPass technology, which is accepted at thousands of retailers across the country. The trial would last up to six months.

Called "near field communication," each phone would include a specially programmed radio chip that sends the payment data.

Citi MasterCard account holders with a Cingular Wireless account have been selected for the trial. To make a payment, at a PayPass location the phone would be held near the sensor. The amount of the purchase is then added to the cell phone bill.

In addition, the 4, 5, and 6 lines of the New York City subway would be outfitted with the technology, allowing users to wave the phone in front of a sensor to use it to pay the subway fare.

"Carrying a mobile phone has become almost as common as carrying a wallet," Cingular technology realization vice president Scott McElroy said. "This trial will continue to help us learn more about how NFC technologies work and how customers will want to use their phones as part of their real-world transaction process."

Technology has been available in Scandinavia to purchase items via a cell phone for almost a half-decade. NTT DoCoMo subscribers in Japan have similarly had the option to purchase phones with the technology since 2004.

Other handset manufacturers, including Samsung and Motorola, are also developing similar systems to accept payments. In the future, the technology could even be used to download coupons and offer discounts to those who use it, say its supporters.