Are credit cards nearing the end of their lifespan? I don’t mean credit card accounts, but what about the physical cards themselves? Some people think contactless mobile payments might prove to be a credit card killer.

Not sure what contactless mobile payments are? Let’s take a look at them and why they may (or may not) be a serious threat to the traditional credit card.

What are Contactless Mobile Payments?

Contactless mobile payments allow you to make a purchase without having to swipe a physical credit card. Instead you would wave your mobile phone in front of a reading device and your credit card account would be charged for the transaction. This can be done using something called a near field communication (NFC) chip installed in the mobile device. This chip puts out a signal that can be read when you wave it within several centimetres of the reading device when you’re ready to make a payment. NAB has been one of the banks leading this revolution in the Australian market with their Visa credit cards.

Are Contactless Mobile Payments a Threat to Credit Cards?

Contactless mobile payments aren’t really a threat to credit card companies as you would still have a credit card account. This is basically just another way to access that account to make charges. The real question is whether or not they will replace physical cards. While it’s a nice theory, it probably won’t happen in the foreseeable future for the majority of consumers.

First, let’s look at some of the benefits. Contactless mobile payments are certainly convenient. You won’t have to carry around a wallet full of cards anymore. Just bring your mobile phone with you and you can pay at the register with a quick swipe. Another benefit is that you might be able to get through lines faster with a quick swiping technology as opposed to waiting for traditional cards to be processed for each customer — especially in cases like fast food restaurants or coffee houses where people want to get in and out fast.

Yet mass adoption of the technology could be a long way off at best. As of October 2010, the AIMIA reported in its 2010 Australian Mobile Phone Lifestyle Index only 55% of Australians who responded have actually used or visited information-based services from their mobile phones. That means a significant portion of mobile phone users still primarily think of them as phones or entertainment devices and not more advanced data devices. This kind of expansion of the data side of mobile technology will likely take a while before it’s truly adopted and saturating the overall market.

The same report showed that only 17% of respondents used a mobile phone to make any kind consistent payment on a monthly basis. When making purchases specifically not for the mobile phone itself, that number drops to 9%. That leaves a long way to go. And of course some consumers will have security concerns (like the potential for “eavesdropping” devices that can pick up the phones’ signals, which could gain in popularity as more and more consumers begin to use the technology).

You can’t blame those who want to jump in and try it. The technology in general has been around for over five years (at least) in various parts of the world. But at the same time, you can’t blame those who choose to take more of a “wait and see” approach to make sure things are as safe and secure as possible. And until that latter group gets on board, we’re probably nowhere near ready to call contactless mobile payments a “credit card killer.”