Nokia turns phones into credit cards

Nokia is distributing 500 new phones equipped with the special payment technology as well as 1,500 free phone covers that can snap onto current models in Irving, Texas, a suburb of Dallas and the home of Nokia's U.S. headquarters.

The phones are equipped with MasterCard's new "PayPass" payment technology that lets consumers wave by or tap MasterCard credit card-connected devices on a reader to charge their accounts, rather than swiping cards through the retailer's magnetic stripe reader.

In the Irving, Texas, trial, which is scheduled to last six to eight months, consumers can wave their SmartCover Nokia phones in front of the reader instead using a card. Both PayPass cards and SmartCover phones come with hidden computer chips and radio frequency circuits, which transmit payment details through the air rather than via a magnetic stripe.

Half a dozen merchants in the Las Colinas neighborhood of Irving are equipped with the PayPass readers and are participating in the trial, said Keith Nowak, a Nokia spokesman. They include Chevron, Rockfish Bar and Grill, Jason's Deli, Corner Bakery and Wolf Camera.

As part of the trial, participating merchants are able to send advertisements to consumers' SmartCover phones using a short-messaging service. Consumers can opt out of receiving the advertisements after 30 days, Nowak said.

MasterCard is also testing its PayPass technology in Orlando, Fla., in a trial that involves next-generation credit cards rather than the Nokia phones. More than 16,000 cardholders and nearly 60 merchants are participating in the trial, which started in December, MasterCard said.

MasterCard is developing the technology to increase credit card transactions and replace cash payments in so-called quick-pay retail environments such as convenience stores and fast-food restaurants, the company said.