Cash, Credit Card or....iPhone?

You win a bet, but the loser does not have enough cash on him to settle it. If he has a credit card, and most people usually do, there is finally a solution. A number of big and small companies -- including eBay's PayPal unit, Intuit, VeriFone and Square -- are creating innovative ways for individuals to avoid cash and checks and settle all debts, public and private, using their cellphones.

Several of the companies have developed small credit card scanners that plug into a cellphone and for a small fee enable any individual or small business to turn a phone into a credit card processing terminal. PayPal's cellphone app calls for only a simple bump of two cellphones to transfer money. Apple has submitted a patent application for a cellphone payment system.

Brian Kusler, 40, a software engineer, is already helping dollar bills join Susan B. Anthony coins as collector's items. After he polished off grilled lamb and zinfandel at a San Francisco restaurant recently, his dining companion paid the bill and asked him for his share. Instead of hunting down an A.T.M., the two bumped their iPhones together, and Mr. Kusler wirelessly transferred his part of the bill, about $100.

“I don't carry a lot of cash; I don't think anyone does these days," Mr. Kusler said. “We go out, and I oftentimes have to remember to pay my friends back when we get home, and I want to be able to just do it right there."

There is evidence that paper money is being used less often, according to the Federal Reserve. Though cash payments are difficult to track, the number of noncash transactions in the United States grew from fewer than 250 a person in 1995 to more than 300 in 2006. Data on the stock of small-denomination bills and destroyed bills indicates that the use of cash peaked in the mid-1990s and has been declining since, two economists at the Federal Reserve Bank of Cleveland found.