Cell Users Take Swipe At Buying; WIRELESS

By Brian Deagon

May 22, 2006 - Three hundred season ticket holders for the Atlanta Hawks basketball team can use their cell phone to buy food at concession stands in the Philips Arena.

They swipe the phone across a scanner to pay the bill.

They can buy souvenirs the same way.

There's more. On the way to their seat, they can swipe their phone across a poster that will take them to Web sites so they can download ring tones and screen graphics, or even stats on their favorite player.
The phones are made by Nokia and contain a chip made by Philips that enables the transactions. Also participating in the trial is Cingular Wireless, Visa USA, Chase and software supplier Vivotech.

The idea of using the cell phone as a mobile wallet is not new. It's used widely in Japan. More than 90 million cell phones are enabled to make transactions at 30,000 point-of-sale terminals in the country, according to research firm In-Stat. The phones can even be used to buy a soda from vending machines.

The American Front
The U.S. market is still in a trial phase. It's unclear if the U.S. will follow Japan's model or morph into something quite different.

Interest is high among cell phone companies, banks and retailers. If done right and consumers adopt the technology, it could enhance brand affinity, save consumers time and lead to more impulse buying.

The trial in Atlanta began last December and was scheduled to end now that the Hawks and the NHL's Thrashers missed the playoffs.

"We'll be getting trial data at the conclusion of the basketball and hockey seasons," said Jeff Yee, director, mobile commerce & downloads at Cingular. "Our interest will be determined after customer feedback and data have been obtained."

The cellular industry has been down this path before. The mobile wallet technology was first tested in the late '90s and flopped.
"There was nothing in it for the mobile carriers," said David Chamberlain, a researcher at In-Stat.

Nothing in this case means revenue. In order to offer these services, cell phone companies want a piece of the action.
The core element of the mobile wallet is called near-field communications, or NFC.
The chip enables the reading of bar codes, received through a cell phone's camera.
Add in the software and a radio frequency identification device and, bingo, you're ready to walk, talk and spend.

It's also a chicken and egg issue. The mobile wallet is useless without the support of merchants. And they might not jump in until enough mobile phones are equipped to make it worthwhile. It requires cooperation between merchants, cell phone makers, carriers and credit card companies.

Still, the profit potential makes this move inevitable.

Opening Wallets
In-Stat believes 25 million mobile wallet users could be in the U.S. by 2010, or 7% of the cell phone market. That's an optimistic forecast. A more rational estimate, says In-Stat, is 10.7 million users, or 3.2%.

The mobile wallet could replace the leather wallet. The phone could function as a credit card or ATM card. In Japan the phones can unlock electronic door locks. The phone could be used for a bus or subway pass. It could also replace plastic affinity cards used at places like Blockbuster.

One thing that's stymied the market is that cell phones are not adept at Web surfing. Typing in a Web site on a keyboard that's designed for dialing phone numbers is hard.

With an NFC chip, the process becomes a snap.

Swiping the phone over a bar code could provide enough information to fill the phone with visual icons.

Amdocs, a provider of software and services that enable electronic transactions, recently acquired Qpass for $275 million, with the mobile wallet concept in mind.

Qpass facilitates electronic transactions between merchants and mobile service providers. Such transactions include the purchase of ring tones and music.