Coming to a Back Pocket: The Wallet Phone
Japan is pioneering wallet phones, a technology that allows consumers to wave their phones in front of a scanner at a cash register, and the price is either deducted from a prepaid account or charged on credit for post-pay services. The encrypted and secure phones are also used to unlock electronic doors.
But there are hurdles. Companies must find ways to break the psychological barrier for skeptical consumers and they must design new business models as the lines blur between banks, financial institutions and cell phone companies.
The Japanese telecommunications operator, KDDI, for example, recently set up a bank along with Mitsubishi UFJ Financial Group. NTT DoCoMo, the biggest Japanese wireless carrier, offers credit cards and lending services in conjunction with Sumitomo Mitsui Financial Group.
Outside Japan, telecommunications and financial interests are still working out how the wallet phone payment business would operate and how to share the profits.
McDonald's Japan and 7-Eleven convenience stores have been testing the technology and the use of mobile discount coupons. Sony and DoCoMo wireless have launched a mobile platform for retailers.
The National Association of Convenience Stores also reports that North American retail innovators are quietly and quickly moving towards this technology. Mastercard announced last month that it is in talks with several banks about starting wallet phone services.
Visa, the credit card giant, is developing an application to allow in-store contactless payments by cellphone for Google's Android operating system.
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