Mobile Wallet No Longer Far-Fetched

Support in the United States for wireless banking using cell phones has gained enough support over the last 18 months from different industry segments to make the mobile wallet a realistic end game.

A report from David Chamberlain, principal analyst for wireless at In-Stat, found evidence that the U.S. market may overcome a crucial issue — technology incompatibility — and make progress during 2008 toward contactless payments using cell phones.

Companies in several different sectors such as Visa in the credit market and AT&T and Verizon in the wireless communications sector have found common interest in promoting this technology. And with companies such as VIVOtech and Firethorn building solutions that allow the sectors to work together, progress is being seen in the space.

The current level of common interest is on near field communications, the technology that ultimately may be used in both mobile phones and point-of-sale terminals for wireless transactions and payments, which would be necessary for the mobile wallet to become a reality.

Chamberlain’s research determined that depending on several technology, commercial, and marketing factors, between 8 million and 30 million customers in North America will be using NFC-based contactless payments by 2012.

He also said that more than 34 million cell phones could be used for other financial applications like online banking by 2012 and that most of the companies involved in bringing mobile finance to the North American market have similar goals and understanding of the current market, which is critical to the development of the market.

The mobile wallet, said Chamberlain, is much more than using one’s cell phone to buy things online. It includes multiple credit cards, membership cards, library cards, debit cards, loyalty cards and any other current form of card-type transactions. When he did a similar study 18 months ago, he said the results made him pessimistic about the industry achieving wireless transaction technology.

“I really thought competition for the very basic technology would kill the whole thing completely,” Chamberlain said. “Today, I see players in all sectors all trying to get to the same place.”

A couple of important barriers have been removed, he said. On the consumer side, the concern over security has been mitigated by the way NFC works, which is only from a couple of inches between cell phone and POS terminal. The other bigger hurdle was the concern by credit companies and phone companies about maintaining control of their customer data. This is being solved by companies providing a “Trusted Service Manager” which acts as a firewall between the two entities.

Chamberlain said it won’t be this year, but by 2010 or 2011 there will be enough cell phones and POS devices using NFC to move the market along very quickly.

AT&T www.att.com
In-Stat www.in-stat.com
Firethorn www.firethornmobile.com
Verizon Wireless www.verizonwireless.com
Visa www.visa.com
VIVOtech www.vivitech.com