NEW YORK -- Many companies are picking up on what has become
commonplace in Japan -- the wallet cell phone. One convenience
company, 7-Eleven, is implementing electronic card readers at some of
its stores for Nokia phone users to use as a payment method.
The phone works as a contactless payment system, similar to a
contactless credit card, where a chip is embedded in a device, and a
reader uses radio waves to read the embedded information.
Several years ago, the technology as debuted in Japan. NTT DoCoMo, a
Japanese wireless network, sold wallet phone services to more than 19
million, according to the report. The trend is growing as well.
ABIresearch, Oyster Bay, N.Y.-based technology research firm,
estimates that by 2011, wallet phones will make up 30 percent of the
global cell phone market -- about 450 million handsets.
"Some markets are already taking off, and that gives us a good feeling
that some of the forecasts will materialize," said Gerhard Romen, the
head of development for phone maker Nokia.
Finland-based Nokia, the world's largest cell phone maker, is
partnering with MasterCard to offer two cell phone payment
services. One of them will be tested at 7-Eleven stores, the other, at
Cingular Wireless and Citigroup.
Currently, another cell phone maker, Motorola, has three trials
underway, one involving Discover. The pone marker is providing the
phones and software, using Motorola's M-wallet program.
If the technology is a success, it could prove to be much more than
contactless payments. The device has the ability to hold coupons, and
loyalty program points, in addition to bill payments and online
banking.
One customer, Frank Hernandez, a subscriber to the Discover program
with Motorola, uses his cell phone as his payment option of choice. He
uses the device at places where contactless payments are accepted, and
said he probably buys more snacks at convenience stores now because of
the wallet phone.
"It's very handy," he told the paper. "I use it all the time."
While the main benefit is speed, consumers could also use the phone in
place of cash at retailers, the report stated.
However, the technology faces several hurdles, including security
risks, phone theft and general acceptance. Only 8 percent of consumers
in general said they would most likely use their cell phone for
contactless payments over other contactless devices such as a credit
card or key fob, according to a recent Javelin survey. This was not
the case for younger generations. Nearly 20 percent of consumers in 18
to 24 year olds would do the same, the study found.
One of the biggest concerns mentioned during the survey was
security. A significant number surveyed said they are not interested
in contactless cards or phones because they seem less secure than
traditional credit cards.
However, this is just a consumer perception, according to Javelin's
Bruce Sundin. "It's a new technology adoption issue," he said. PIN
numbers are required to access the account and consumers have no
liability for credit card losses with the theft of a cell phone, he
added.
In addition, restraint from retailers is another hurdle the technology
faces. Merchants must be convinced the contactless terminals -- which
cost about $100 to $200 per device -- are worth the investment, the
report stated.
Copyright 2007 Reuters Tech
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