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That Little Chip in the New iPhone May Spell the Death of Plastic, If Not Cash

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Remember when we all used to go to banks?

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MINYANVILLE ORIGINAL When comedian Louis C.K. appeared on Conan O'Brien's late-night talk show in 2010, he riffed on the ways that consumers' habits have changed since the advent of ATMs and online banking. In the past, "You had to stand in line [at the bank] and write yourself a check like an idiot," C.K. said, "and then when you ran out of money you'd just go, 'Well, I can't do any more things now.' That was it."

Then came credit and debit cards and online bill paying. Cash quickly took a backseat to plastic.

Well, it looks like plastic itself is now under siege and Apple (AAPL) looks like it's going to be at the forefront of the movement towards a nonplastic cashless economy.

Several articles have been suggesting that an unidentified chip in the new iPhone is, in fact, a near-field communication (NFC) device, which is a chip that would allow the iPhone to be swiped like those old SpeedPass wands that Mobil (XOM) started issuing in the late '90s. If that's really what this chip is (and it seems incredibly likely since Apple has been developing remote payment apps and beginning to integrate NFC code into the new version of iOS), you'll be able to buy coffee and groceries, board a bus or a subway, and more -- just by swiping a phone over a sensor.

This is not, of course, the first sign that our economy will, sooner or later, give up on paper money. Starbucks (SBUX) announced a partnership with mobile payment company Square this month that could go a long way towards automating or simplifying payments at the world's largest coffee chain. Four billion cups of coffee per year means a lot of work for mobile payment processors. But if Apple really wants to jump into the market, things are going to start changing very, very quickly.

Will cash just cease to exist in the next few years? Of course not. Plastic credit cards might not be so lucky.

Middle-class consumers already make well over 50% of their purchases with plastic of some sort. If iPhone payments are on the way when the new device rolls out September 12, then the idea of even using a credit card could become as novel -- and old fashioned -- as visiting a bank.
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