Already a device of multiple disguises, from
camera to music player and mini-TV, the cell phone's next trick may be the
disappearing wallet.
After all, since more than a quarter of the people on the planet already carry around cell phones, and hundreds of millions are joining them every year, why should they bring along credit and debit cards when a mobile device can make payments just as well?
At the simplest level, all that's needed is to embed phones with a short-range radio chip to beam credit card information to a terminal at a store register. It's not unlike the wireless system used to pay tolls on many highways or the SpeedPass keychain wand used to buy gas at Exxon Mobile Corp. pumps.
This is already a reality in Japan, where NTT DoCoMo Inc. says 3 million cell phone subscribers use its Mobile Wallet service to buy things at 20,000 stores and vending machines.
Similar services may be on the way in the United States and Europe. MasterCard International Inc. has been testing phone-based versions of its PayPass contactless payment technology since 2003, and may conduct a significant market trial next year.
But there also are more ambitious visions brewing that contemplate the cell phone as a new focal point for managing your personal finances. The phone would supplant not only credit and debit cards, but wallets, checkbooks, Web sites, computer programs like Quicken, and online bill payment services such as PayPal or CheckFree.
While the mightiest players in Western banking have yet to embrace that notion, and some are dubious of the appeal, the concept has drawn interest in other regions and may get a tryout here soon.
A small technology company named C-Sam Inc. recently succeeded in launching its OneWallet cell phone platform with corporations in the United Arab Emirates, India and Japan.
Executives for the Chicago-based company assert they're about to sign on one of the biggest U.S. banks and one of the nation's top issuers of store-brand credit cards to conduct trials of the platform, which can be used to manage a variety of accounts and transactions from a cell phone.
In the United Arab Emirates, OneWallet is being marketed by U.A.E. Exchange as a convenience to that nation's huge work force of expatriates from India who regularly wire money home. So far, there are about 400 users.
Alphonso Francis, a Bombay native who works for U.A.E. Exchange in Dubai, sends money three times a month to his family in India.
The process usually is a drag. "I have to spend one and a half hours in traffic, pay for my parking, and then spend another one and half hours in traffic ... all just to make a transaction which takes only two minutes at the transfer house," he said.
Now, using OneWallet on his phone, he enters his PIN number, designates which account the funds should come from, the recipient, and whether it should go to a bank account or a Western Union-type outlet in India. The order is transmitted over the cell phone's Internet connection in seconds.
Despite the logic of tying all your financial dealings to a device that many people keep by their side at all times, major credit card companies don't see the phone as a convenient nerve center for managing finances. The card companies' main goal is to drive more spending — and card transaction fees — by making the phone a quick way to pay with a single designated account.
"The benefits of having a wallet on your phone with multiple cards are overblown," said Murdo Munro, a MasterCard executive involved with PayPass. "If a consumer has to boot up an application on the phone, and then go through four or five menus, and then choose a card to make a payment, that's an awful lot slower and less convenient than just taking a card out of your wallet."
The PayPass system aims to improve even on that step. A credit card number is embedded in a chip that is activated by waving it in front of a reader, ringing up a sale quicker than handing plastic to a merchant or swiping it.
That technology is already gathering momentum without being installed in phones: In May, JPMorgan Chase & Co. announced plans for a mass-market rollout of MasterCard and Visa cards with a radio chip, starting this summer in Atlanta with nearly 1 million of the cards going out to consumers. Likewise, major merchants led by McDonald's Corp. and 7-Eleven Inc. are already installing radio terminals over which customers can flash these new-age plastic cards.
But C-Sam founder Sam Pitroda, a rags-to-riches telecommunications entrepreneur from India, sees the mobile wallet as a means to empower the masses in emerging markets and as a prospective boon for financial institutions, wireless companies and retailers.
"There are 1.8 billion cell phone users, but not 1.8 billion checking accounts," Pitroda said. "So there's a big potential for banks if they can get more people to open accounts, even if it's just $50 or $100."
One wild card that may bolster the case for Pitroda's wider vision — making the cell phone more than just an oddly shaped credit card — is the wireless industry, where network operators may eye new revenue streams from financial services.
Notably, the wireless payment transmitters in NTT DoCoMo's phones are not connected in any way to the circuitry of the overall device, so there's no way to integrate charge transactions with a wallet application on the handset.
But Nokia Corp. and Motorola Inc. are developing mobile handsets that integrate the payment chip with the rest of the phone, opening the way for more innovative applications.
Handset makers rarely invest in new technologies without interest from cellular carriers. Which means the wireless wallet could make a push even without the financial industry behind it.
