Your phone is your wallet

Some times at talk shows, the audience has to vote for something, and when I was watching one of these shows the other day I was surprised to see how many people had to put their wallet on their lap to reach for the voting device. A wallet. You know, one of those leathery things with your credit and debit cards and lots of receipts and your driver’s license and such.

This got me thinking about the great mobile phone and technology-savvy world we live in. Shouldn’t all they be putting down be a mobile phone or some other device? What are we doing with paper? I also have one of those wallets. There’s lots of paper in it and VISA cards and other things. Couldn’t I move this onto my Visor or better yet, onto my mobile phone?

To start with I need to be able to pay without the need of my wallet, just to get all the other junk out of the way. The obvious solution would be a VISA card and this is where I started my search.

VISA is working on something they call u-commerce, which stands for universal commerce, or commerce without boundries. This is mainly because they believe that no one system will prevail, but that you will have a lot of different payment methods to choose from and they will be usable on all, or at least most, of them. VISA’s first CEO, Dee Hock, already said that payment transactions “will require communications networks reaching out to wherever a customer chooses to be.”

VISA believes that four fundamental factors for u-commerce are needed: Simplicity, Security, Systems and Standards. I can probably agree with this, especially as it makes a nice buzz term again, the 4 S-es of u-commerce (my term, not theirs).

MasterCard is, of course, also looking into mobile commerce, or m-commerce in short. I first noticed this when flying back from London where the airport was full of ads with mobile phones with a MasterCard sign on them. Looking through their site on m-commerce you will see that they have several possible ventures running.

One of these is a smart card phone which will be fitted with a smart card reader in the phone to read the chip that will soon appear on all credit cards for security purposes. This just makes paying easier as the chip includes all your shipping information and everything.

Another option would be to put the credit card information directly on the chip in your mobile phone, the SIM card and yet another one to put that information at a trusted location like your bank. In the last case you will work with 3-way transactions between your mobile phone, bank and merchant. This would be a mobile phone-accessed e-wallet.

The fourth method they talk about is mobile phone verification, which means you do not give your credit card number at check-out but your phone number. You are then called up or sent a text message, either of which you confirm to and your payment is taken care of, with the help of your credit card provider of course.

Some things are starting to fall into place now. One thing that comes to mind is that all the receipts in my wallet would be in my phone. If the phone can sync with my desktop, via Bluetooth or the IR-port, then I could also import or print them there. The big picture is starting to get lot clearer now, and all of these options are viable. My wallet might be redundant in no time.

If you take a look at the methods in last week’s article (_Note: the article was published in two parts_) you will notice that only the first two will really require extensive changes in your mobile phone, as you will either need to install a chip card reader or alter the SIM card. I then remembered that Nokia actually announced a new phone for quarter 1 of 2002, the 6510, which will have a mobile wallet installed. With this phone, your credit card information is simply stored on your SIM card. Interestingly enough there is, or was, a trial going on in Australia between VISA and Nokia with a server based wallet.

There are probably different factors influencing these two systems and one might be the perceived security, not to be confused with real security. While the server based wallet is probably as secure or even more secure than the SIM card based one, the general perception will be that you kind of want your credit card with you in your pocket. Storing it remotely might feel out of place for some people, and this is probably why Nokia chose the SIM card solution for the 6510.

But what about the last method? At this time, welcome PayBox, a German company that is establishing itself slowly but surely. To use the system, you register with your bank account and PayBox then acts as a link between your mobile phone and your bank account. If I would like to pay for a cab then I give the driver my mobile phone number, or alias, and he enters it into his system. I then get a phone call and a nice voice tells me that this cab driver is requesting an amount of X EUR. I can then say yes and enter my password and the money is securely deducted from my bank account. For me, the entire system is free. The system is gaining acceptance on the web, at least in Germany, but for paying in stores it is moving along at a slower pace, partly because a POS (point-of-sale) terminal is needed there.

I’ve mostly talked about mobile phones up till now, but Palm also has some ideas. These involve proximity payment which means that you have for example a Bluetooth chip in your mobile phone and there is a Bluetooth POS at your merchant and your phone and the POS talk to each other via Bluetooth to handle the transaction. The good side with this is that it is most likely will happen a lot faster and could also be working in super markets with automatic payment once you walk out of the store. The bad side is that you need a lot more hardware to get it work.

Another thing needs to be remembered in all this very complicated but highly interesting field as well: Mobile phone companies want part of that beef too and what they might do is let you pay for things with your mobile phone bill. They can’t go a lot further than that though because they are not really allowed to store money for you. This is what banks can do and getting a bank license is really, really hard. The German Mobilcom said some time ago that they wanted to form a bank but didn’t mention anything about it ever since. If you handle transactions only, like PayBox, VISA or PayPal, then you do not need a bank license and can expand worldwide a lot easier.

What the phone companies might be handling somewhat more efficiently is micro-payments. Paying for a coke with your VISA card is not really efficient but if you pay with your phone bill then it might work a lot easier. You can already get a coke out of a vending machine with your mobile phone in Finland, and I am sure this will be something that we will be accustomed too fairly soon. An example of this can be what Europolitan Vodafone and TietoEnator are launching a new payment method in Sweden. I also recently learned that you can pay for drinks and subway tokens with your mobile phone in Santiago (Chile).

So what have we cared for now? We can possibly remove a large chunk of our money as well as some of our cards from our wallet and at the same time will get fewer receipts in your wallet. What we have not yet cared for are our licenses that we need to carry with us but still, our wallet has the potential to shrink a great deal in the not to distant future.