New Payment Technologies

Cash and checks are starting to look like ghosts of payments past.

Credit and debit cards are the popular ways to pay right now, but some new technologies are showing up to the party, both offline and online. In one of the more interesting developments, Pay By Touchhas had success in rolling out a biometric system that lets customers pay with a swipe of their finger. And PayPalrecently introduced PayPal Mobile, which lets users send and receive money via cell phone text messaging and is already being used by MTV, the NBA Store and other for-profit and nonprofit companies.

Contactless payments are also slowly rolling out across the nation. These let customers charge items to their accounts by simply waving a card or device near a reader. It's a technology well-suited to purchases that are quick and simple, such as gas, convenience store merchandise or vending machine items. Getting started with contactless payments is rather simple for businesses. "The contactless infrastructure is built on the existing payment network. It's a fairly straightforward process to enhance a terminal to accept a contactless payment as well as a mag stripe payment," says Niki Manby, vice president of market and technology innovation at Visa USA. Still, expect rollout among merchants to be gradual.

Some new online payment technologies are focusing on security issues. For example, MODASolutions'Secure-eBill service lets buyers use their online checking accounts for internet purchases in the same manner that they would pay a utility bill online. Taking a different approach, a team of students and faculty from the University of Maryland are developing a SecureGo USB device that employs hardware-implemented encryption technology for secure online transactions.

If you're considering adopting a new payment technology, first take stock of your business needs. Says Manby, "It's not technology for the sake of something new-it's technology to try to solve a problem or improve on a scenario, like getting lines to go faster." These new innovations promise to bring added convenience and security for both merchants and consumers alike.

This article was originally published in the July 2006 print edition of Entrepreneur with the headline: Pay It Forward.