Phone-to-Phone Money Transfers

What’s the Latest Development?

PayPal announced this week that its smartphone application will allow users to transfer funds electronically between phones. If you own a Samsung Nexus S phone, which uses the Android platform, you will now be able to transfer money to other Samsung Nexus S phones, or any device which shares a similar near field communications (N.F.C.) chip. The same technology is currently used to allow smartphones to exchange contact information, rather than entering in the data by hand. Already popular in Asia, N.F.C. chips are likely to become increasingly popular in the U.S.

What’s the Big Idea?

Money continues its march toward abstraction. The major political discussions that took place when the dollar was taken off the gold standard seem anachronistic at a time when money is becoming further and further removed from any fixed source. Paper currency is already being phased out as some companies—airlines, for example—seek to streamline their business operations by accepting only electronic forms of money. How far off are we from the elimination of credit and debit cards? When will a single device serve all our needs, and then, how secure will our money be?