Make a payment - via your phone

Paying your way

Do you ever find yourself in the position of not having enough in your wallet when it comes to splitting a bill or owing a friend some money? Well now it appears that technology may have the answer.

As the use of cash starts to fade out and we pay by card for everything, technology may have the answer for how we can pay our friends by card when we owe them money. A number of big and small companies - including eBay's PayPal unit, Intuit, VeriFone and Square - are creating innovative ways for individuals to avoid cash and checks and settle all debts, public and private, using their cellphones.

Several of the companies have developed small credit card scanners that simply plug into a cellphone, then for a small fee, they enable any individual or small business to turn a phone into a credit card processing terminal.

Each company works in a different way. PayPal's cellphone app calls for only a simple bump of two cellphones to transfer money. While Apple has submitted a patent application for a cellphone payment system.

Death of paper money?

Over the years, there has been evidence that paper money is being used less often, according to the Federal Reserve. Though cash payments are difficult to track, the number of non-cash transactions in the United States grew from fewer than 250 a person in 1995 to more than 300 in 2006. Data on the stock of small-denomination bills and destroyed bills indicates that the use of cash peaked in the mid-1990s and has been declining since, two economists at the Federal Reserve Bank of Cleveland found.

"When debit cards were introduced in the early '90s, that was the beginning of the slow and gradual decline of paper checks and cash," said RedGillen, a senior analyst at Celent, a research and consulting firm on technology and financial services, based in Boston, to The New York Times.

But, cash has remained essential in certain instances, like paying back a colleague for lunch, buying fruit at a farmers' market or buying a beer at a cash-only bar. These new mobile payment technologies could finally change that.

"The problem with cash is that it is tangible, it's inconvenient, you have to carry around a bunch of bills and you have to continually go to the ATM," said Jack Dorsey, a Twitter co-founder who is now the co-founder and chief executive of Square, which makes a dime-size device that anyone can plug into the earplug jack of an iPhone oriPad to instantly accept credit card payments. "If we can make cards more convenient and faster, it can replace a lot of the experiences around cash."

Making an impact

The new services could have the biggest impact on the smallest businesses, like farm stands or house cleaners, that accept only cash and checks because they do not have stores to house credit card terminals and do not want to enter into complicated, long-term relationships with credit card companies.

Fraud protection offered by the credit card companies is the same as when the card is used at a cash register. Some of the new companies say security against fraud might even be improved because they provide e-mail receipts, and those from Square include photos and a map of where the transactions were made.

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