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Is The End Near For Credit Cards?

Smartphones could be the dominant payment method by 2020.Will cash, debit and credit cards soon go the way of vinyl records, fax machines and film cameras?

A growing body of research suggests that a majority of consumers will soon pay for things by swiping or waving their mobile telephones at the checkout rather than pulling out a traditional credit card or cash.

According to a recent report by the Pew Internet & American Life Project, two-thirds of experts surveyed believe that by 2020, “most people will have fully adopted the use of smart-device swiping for purchases they make, nearly eliminating the need for cash or credit cards.”

Proponents of mobile payments believe the explosive growth of smartphones, plus the convenience and security of mobile payments systems, makes them an obvious choice to replace cash and cards, the report noted.

But there remain several obstacles before a large percentage of us embraces the so-called mobile wallet — in which credit card and bank payment information is stored on smartphones rather than plastic cards.

For one thing, not everyone has a smartphone, a necessity for conducting mobile payments, and not everyone wants to get one. Nor are many merchants set up to accept payments via mobile phones.

We also need to be convinced that mobile payments are a superior alternative to cash and credit cards. Heck, most of us haven’t even converted to mobile banking.

But over time, it’s likely mobile payments will replace a large percentage of cash and plastic transactions, although right now it’s hard to see them replacing our wallets entirely.

This, of course, isn’t some far-off science fiction we’re talking about. It’s already here.

U.S. Bank and Ace Hardware have just rolled out a new iPhone application that bridges the gap between the world of credit cards and mobile payments.

The new Ace Rewards Visa App lets customers apply for and, if they qualify, receive a virtual credit card on their phone which gives them immediate credit to start shopping at participating Ace Hardware stores.

To pay, the customer simply hands their iPhone, with the virtual card displayed, to the cashier.

Here’s a look at the credit card details:

APR 13.99% to 22.99% variable on purchases, balance transfers and cash advances
National Average APR 14.91% (source: CreditCards.com)
Annual Fee None
Rewards Up to 5% back at Ace stores, up to 10% back in quarterly categories, 2% on gas and groceries, 1% everywhere else. Cardholders receive a $25 reward certificate redeemable at Ace when they earn 12,500 points.
Verdict Ace is the place to get a virtual credit card and earn real rewards.

The app, downloadable at the iTunes store, also features a link to Ace’s website where customers can view products or find the nearest Ace Hardware store.

U.S. Bank plans to roll out an Android version of the Ace Rewards Visa app later this year, as well as apps for other credit cards.

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