Microsoft Shows Off Payment Technology in New Phone Software

Microsoft’s mobile operating system, Windows Phone, hasn’t made much of an impact on the phone market. But the company is far from giving up. It is investing even more in the software with a major upgrade set for release this fall. What’s it got that the iPhone doesn’t? A complete mobile payment system.

The new software, Windows Phone 8, will be built on the same foundation as Windows 8, the next version of Microsoft’s operating system for desktops and tablets, the company said on Wednesday at a conference for software developers in San Francisco.

Among other features, Windows Phone 8 introduces support for hardware with near-field communication, a technology that enables devices to exchange information wirelessly over very short distances, allowing smartphones to be used for payments. Accompanying that, Windows Phone 8 will include a wallet application to store credit cards, coupons, frequent flyer accounts and customers’ credit and debit card information.

That’s a bit better than what Apple offers for mobile payments. Apple’s new iPhone software, due out this fall, has a similar wallet app called Passbook. But its hardware doesn’t include near-field communication, so it relies on displaying bar codes to redeem purchases. (The addition of Passbook, however, hints that Apple may be preparing to add near-field to a future iPhone.)

Other than enabling payments, the technology will allow Windows phones to pull off some other nifty tricks. Tapping two phones together could exchange business cards, or link the phones  to play a board game, said Joe Belfiore, Microsoft’s vice president for the Windows phone program.

Windows Phone 8 will also add features like encryption to improve security and support for multicore processors, which would improve multitasking.