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Visa and Bank of America to Test Paying via Cell Phones On-the-Go Next Month

person using cell phoneEarlier this month, AT&T and Verizon announced a joint venture to test a new system that would allow customers to pay for products with their smartphones. Now, Bank of America and Visa have followed in their footsteps, and, as Reuters reports, will begin testing their own smartphone-payment system next month.The test run, which will take place in New York from September through the end of 2010, will allow customers to place Visa-approved chips in their smartphones. These chips emit radio signals over short distances, the signals being picked up by in-store, point-of-sale devices. In order to complete a purchase, a user would merely need to "bump," or wave, his or her chip-equipped smartphone.

So far, it's unclear how many people will be involved in the test, although Visa spokeswoman Elvira Swanson says her company's venture with Bank of America wouldn't be any larger than any of its other mobile trials with different corporations. Visa originally announced plans to explore mobile payment mechanisms back in February, although the company didn't then specify with which banks it would collaborate on any future projects. Now, in addition to its program with Bank of America, the credit card company is gearing up to launch a similar mobile payment pilot with US Bancorp, and will reportedly put it into action this October.

"We see this as a critical capability given the increasing acceptance and adoption of bank services on the phone," says Laurie Readhead, head of electronic commerce at Bank of America. Although mobile payments have already taken off in Japan, American consumers and merchants have yet to truly embrace the idea. It may take some time before users feel comfortable with having a so-called "digital wallet" in their phones, but big-time banking and credit corporations, at least, seem to be optimistic that they will.

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