Just Say Charge It!

Harold Penner

Charge your cell phone; charge your burger. A new credit payment method is being introduced in Toronto with plans for expansion across the country. The Globe & Mail reported on Visa Canada chief executive, Tim Wilson’s introduction of this new payment method – none other than the ubiquitous cell phone. The chip technology that is being introduced into all credit cards over the next few years to improve security and reduce counterfeit fraud will be inserted in all new cell phones to allow them to be used in place of a credit card. The technology is already in use in places like Australia, France and Hong Kong.

Some of the advantages of chip-enabled cell phones being touted by Mr. Wilson are that the chip will also be able to store loyalty card information eliminating the need to carry loyalty cards, users will be able to pay for public transportation with a wave of their cell phones, and event passes may be purchased online then the phone scanned at the turnstile when entering the event. Retailers will be able to forward coupons to your cell phone based on your spending habits and proximity to their store so you can take advantage of the coupon for additional savings (or be tempted to make an unplanned purchase).

Nathan Dungan of Share Save Spend™ predicted that this new technology would soon be introduced to North America when he addressed the Mennonite Foundation of Canada AGM in April 2009. It appears it may be arriving even earlier than he had anticipated. Along with comments on the new technology Nathan shared how spending habits are being impacted by the new technology. When using credit cards average consumers spend 12 – 18% more than if they use cash. Where the new technology is already in use consumers using chip-enabled cell phones spend another 10-20% more than if they use traditional credit cards. Clearly there is a significant incentive to the retail and credit industries to encourage the transition to the use of cell phones for making purchases.

Whether using credit cards or eventually moving to a new payment method like the cell phone we at Mennonite Foundation encourage you to stick to the basics: prepare a budget reflective on your income level; regularly review your spending to ensure you are within your budget; if using a credit card, determine beforehand how you will use it (type of purchases and maximum dollar amount per purchase); pay the credit card invoice in full each month.

A word of caution, should this new technology take hold it will give a whole new meaning to an old credit card commercial tagline "just say charge it.” After all a dead phone would leave you stranded in more ways than one.

Harold Penner is a stewardship consultant at the Winnipeg, Manitoba office of Mennonite Foundation of Canada (MFC).  For stewardship education and estate and charitable gift planning, contact your nearest MFC office or visit Mennofoundation.ca.