Wallet Phones Still Not Catching On

By Keith Regan
www.EcommerceTimes.com
Part of the ECT News Network
09/13/05 1:18 PM PT

In addition to overcoming consumer concerns, carriers will have to find
the right technology to appeal to vendors, retailers, banks and credit
card companies. Some options allow for multiple credit card numbers to
be stored on a single phone, while others use a pre-paid system more
like a debit card.

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A year after Asian mobile carriers first launched them widely, consumers
are still not rushing to adopt systems that enable mobile phones to be
used as electronic payment devices.

NTT DoCoMo (NYSE: DCM) Latest News about NTT DoCoMo launched a wallet
phone service in its native Japan last year and more carriers have
announced plans to follow suits in key Asian markets. Meanwhile,
MasterCard and Motorola (NYSE: MOT) Latest News about Motorola have been
working quietly on new technologies for nearly a year now that will help
make the cell phone a payment device as well as a personal
identification tool. Visa International also has linked with mobile
carriers on two pilot programs in Asia.

But analysts acknowledge that despite high hopes for the service, it may
still be several years before the technology finds its way into the
mainstream.

A recent survey by research firm In-Stat found little interest or demand
among consumers for cell phone services such as electronic wallets.

"Some of those opinions will shift with time," said In-Stat analyst Neil
Strother. "Enthusiasm could build for services that do not poll well
today. But it will be up to manufacturers and carriers to help move
end-users to more favorable views."
Moving Westward

Often, mobile services get their first adoption in Asian marketplaces
where more advanced mobile infrastructure Discover a better way to
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happened with mobile gaming and mobile television and appears to be
happening with using cell phones as a payment device.

NTT DoCoMo recently reported that some 3 million cell phone users and
20,000 retailers and other vendors are signed up for its Mobile Wallet
offering.

While early tests show consumers spending an average of US$30 or more on
each cell-phone charge, many analysts believe the best chance for mobile
payments to gain traction is with so-called micro-payments, with users
buying content such as song downloads, ring tones, games or video clips.

A recent study by Juniper Research argued that the mobile commerce will
be a $40 billion industry by 2009, much of that made up of millions of
micropayments. In Europe, for instance, where such payments are expected
to take hold before they reach the U.S., the average cell phone users
will conduct nearly 30 transactions per year on a mobile handset, but
with an average transaction value of just $3, according to Juniper.
Security a Concern

Analysts believe resistance may be highest in the U.S., where concerns
about security Security, strength, a lower TCO: find out about all the
advantages of IBM Middleware on Linux. and identity theft are at the
forefront.

Telecom analyst Jeff Kagan said U.S. consumers will warm slowly to using
cell phones in new ways, with new blended phones such as the iTunes
smartphone being built by Apple (Nasdaq: AAPL) Latest News about Apple
and Motorola helping to push consumers in that direction.

"But it's still early," Kagan told The E-Commerce Times. "The number of
users actively seeking out those advanced services are still very small."

In addition to overcoming consumer concerns, carriers will have to find
the right technology to appeal to vendors, retailers, banks and credit
card companies. Some options allow for multiple credit card numbers to
be stored on a single phone, while others use a pre-paid system more
like a debit card.

"The mobile phone will be ubiquitous and carriers will offer a range of
services to take advantage of that fact and generate revenue," Kagan
said. "But consumers will have the final say about what works and what
doesn't."