The Commonwealth Bank of Australia has broken new ground in the advancement of mobile payments by introducing a new iPhone application that allows users to pay friends or businesses using Near Field Communication (NFC), Facebook identification, an email address or a mobile phone number.

Kaching (pronounced like the cash register sound Ka-Ching)  will initially only be available for users of the iPhone 4 and 4S (with soon to follow Android support) using a specially designed case with built in NFC chip. With this case, the phone will allow the user to simply tap and pay at a PayPass terminal. ‘This banking breakthrough marks a significant milestone in the evolution of how people pay and receive money from each other,” stated Commonwealth Bank of Australia chief information officer Michael Harte.

According to a CBA spokesperson, the use of a specially designed NFC case is only an interim solution until iPhone, Android and other smartphones introduce new versions of phones with NFC integration built in. In what some believe could be the beginning of the end for plastic credit and debit cards and potentially even cash, this form of electronic payment would be conducted 24×7 in real time if both sides of the transaction are CBA customers and one to two days if the payment is made to a customer of another bank.

CBA has more than 6.2 million online banking customers and is the seventh largest bank in the world. According to the bank, more than 16 million logons from a mobile device were made in August (a 229% increase from last year) with close to 80 percent of these from an iPhone.

The integration with Facebook is a first in the payments world, but is felt to be a logical extension due to the acceptance of Facebook and the very strong smartphone usage by Facebook users. The iPhone application even integrates other iPhone features such a GPS function to find branches and ATMs.

Kaching iPhone Mobile Payments Screen

While this technology or integration has yet to be introduced in the United States as a mobile banking application, it is expected that new virtual banks such as BankSimple and MovenBank will leverage this technology as part of their rollouts. According to Brett King, founder of MovenBank and author of the bestselling book Bank 2.0, the use of Facebook for payments or even to complete the new account application process is not so far fetched as security and acceptance of Facebook continues increase. In addition, King believes virtual currency like Facebook credits  may replace today’s physical currency (‘The Bank of Facebook: How Will Facebook Interact With the Global Economy‘ Fast Company Expert Blog by Brian Solis).

NFC support is increasing in the U.S. with the launch of the Google Wallet last month that allows for consumers to pay in select stores with phones running its open source platform. NFC is expected to gain much wider acceptance with the anticipated integration within the next generation of smartphones, especially the iPhone 5.

So, is this the beginning of the end for credit cards, debit cards, checks and cash? Will this introduction hasten the full scale introduction of new banks and bank platforms that leverage new technology and payment  methods? Will branches and ATMs even be needed in the future?

I would love to hear your thoughts.