Finance - Artemia

With dizzying speed, cell phones have taken over tasks that might have seemed impossible just a few years ago. We now turn to them for email, web browsing, photography, gaming, and even to act as TV remotes. And soon enough they may be replacing credit and debit cards, too.

The recently launched Google Wallet aims to allow users quick and easy payment at numerous stores and shops nationwide. All that’s required is a mobile device equipped with a near-field communications (NFC) chip and the Google Wallet app. To make a purchase, you have only to tap your device on a sensor pad.

Numerous large companies are betting on this new NFC payment technology which is made possible by a wireless communication standard that enables short-range communications between machines with sensors. NFC chips represent an improvement over Bluetooth ones because they have a low power draw and remain functional – enabling transactions to still be made – even when a phone needs to be recharged.

PayPal, which is owned by the auction giant eBay, is also getting in on the game. After a string of acquisitions, they’re working on covering all aspects of purchasing from start to finish. The innovations they’re developing include: geo-targeted advertising; in-store purchasing through bar code scanning; real-time inventory checks; point-of-sale payment using NFC; and even customer loyalty and promotional services on-demand (think Groupon).

For all of these payment innovators, actually selling new customers on these new products may prove to be a challenge. To unlock these new markets, focused marketing strategies and targeted advertising campaigns will be key.

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For the financial services sector, which is largely driven by relationships, social media offers exciting new opportunities. But it can also introduce significant dangers. Strict regulations apply to everything from a LinkedIn account to a Tweet. Each communication and update must be vetted and archived – which is why many firms are taking a “just say no” approach.

The law has clearly not caught up with the ever-changing and expanding online social landscape. Even so, there are positive signs. FINRA, for example, recently released a simplified presentation of the 10 general principles of their Regulatory Notice 10-06.

To help with regulatory compliance, the technology arm of the Financial Services Roundtable, which represents 100 of the largest financial institutions in the US, has produced a whitepaper outlining potential pitfalls.

These include avoiding managing social media web sites and web activities as if they were advertising. Doing so places them under the purview of the Unfair and Deceptive Acts or Practices Acts and Prize and Gift Acts, among others. Another pitfall is the unintentional distribution of secure information, which can be a problem as more financial services representatives interact with customers online.

Some larger companies, such as Morgan Stanley, have recently decided that the benefits outweigh the dangers. It probably won’t be long before the industry as a whole is leveraging social media to its advantage.

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The Future of Electronic Payments