iPhone becomes contactless payment system

iPhone users will soon be able to pay for things simply by waving their phone in the air – something most of them are happy enough to do anyway.

Visa and DeviceFidelity have come up with a new technology, now certified by Apple, which combines a protective iPhone case with a secure memory card hosting Visa’s contactless payment application, Visa PayWave.

The technology will work for both iPhone 3GS and iPhone 3G devices, as well as many other phones with a memory card slot – the payment card just pops into the slot.

Thousands of merchants throughout the US have already upgraded their payment terminals to support PayWave, says Visa. It’s already rolled out a similar technology in Malaysia and Japan.

The application can be password protected, and uses advanced security technology to uniquely identify each contactless transaction, says VISA. In addition, all Visa mobile payments are backed by Visa’s global processing network and analyzed for potential fraud in real-time.

If a mobile device is lost or stolen, account holders can contact their issuer, just as they would if their card was lost or stolen.

Market trials of the payment-enabled iPhone are scheduled to start this summer.