Imagine using your iPhone as a replacement for your wallet – pay for shopping, travel, dining and just about any other expense using your iPhone. Is it possible? Oh yes! An internet rumor suggests that Apple has tied up with Visa and DeviceFidelity to turn your iPhone into a credit card that could be used in restaurants and other retail establishments.

Apple is a pioneer in Near Field Communications (NFC) and it already owns several patents related to NFC e.g. ticketing, travel and many others. The trials for turning your iPhone into an e-Wallet start as early as this summer (Not to be confused with the iTunes eWallet app, which is a secure password manager). It is expected that the iPhone may eventually integrate several functionalities for performing peer-to-peer transactions, including the storing information representation a user’s payment accounts and crediting accounts, acquiring and sending payment information, and obtaining payment authorization.

The possibilities are endless. A NFC device can be used for acquisition of payment information. In addition, a camera device may be utilized in cooperation with an image processing application to extract payment information data from an image of a payment instrument provided by a payor.

So, how will the payment system work on iPhone? Your iPhone will send payment request information including the identity of the payee (yourself), which may include text data corresponding to the name of the payee, an e-mail address belonging to and/or identifying the payee, or any other type of suitable identification information. Additionally, the payment request may further include information indicating the purpose of the payment request. Your iPhone and payor device are then placed side by side to establish a NFC connection. Once the connection is established, the payment request information may be transmitted to and received by the payor device. The actual payment method may still be a credit card, a transfer from payee’s bank account or any other similar means.

The app is named ‘Transaction’ and is bound to be a game changer for the iPhone. Apple doesn’t want you to carry your credit card, nor does it want you to be writing checks or using your debit cards. Your iPhone will soon be your new wallet so why think of using anything else?