SCHAUMBURG, Ill. -- Taking a cue from a service that is growing in Asia, Motorola Inc. is planning to launch a system that will allow people in the United States to purchase products by waving a cell phone with an embedded chip over scanners at the cash register, reported the Wall Street Journal.
The United States has been late to this game, said the report. Companies in Asia have already introduced cell phones that can do everything from buying groceries to purchasing movie tickets. Tokyo commuters can now board trains by waving their phones [image-nocss] over a sensor in turnstiles.
U.S. operators have been upgrading their networks so they can handle more than just voice calls. Such upgrades happened much earlier in Asia and Europe. But Motorola is the first telecom-equipment maker to attempt to launch a large-scale mobile-wallet service in the United States, the report said.
Before the service can be launched here, however, Motorola has to overcome several significant obstacles, said the Journal. First, it must cut a deal with a wireless carrier. Schaumburg, Ill.-based Motorola said it is in advanced discussions with several cell phone companies and expects a deal later this year. It is also talking to cell phone companies in Asia, Latin America and other regions about the service.
Once the deals are cut, people will be able to download the service, known as M-Wallet, from cell phone companies' websites. M-Wallet is designed to work on a range of devices, including Palm Pilots and phones not made by Motorola.
Another hurdle: Motorola also will have to get retailers to participate and in some cases to invest in upgrading their checkout scanners to communicate with phones equipped with embedded chips, said the report.
Consumers using Motorola's system will sign up through their cell phone's wireless Internet connection, storing their bank-account and credit-card information in encrypted form on the servers of the credit-card companies and banks. Motorola said the service will have four layers of security that it hopes will give consumers enough confidence to store sensitive information. The system turns itself off after periods of disuse, providing some protection in case a user forgets to exit from the system.
The cost of the feature will be up to the wireless carriers. They may charge a monthly subscription fee or a fee for each transaction. Airtime charges also will likely apply.
Initially, the service will be limited to banking transactions such as online bill payment and fund transfers, as well as purchases from participating retailers such as airlines and movie houses. But in six to nine months, when a special chip for the phones is available, consumers will be able to pay for groceries and other things using the scanners at the cash register, Sarab Sokhey, director of business development for Motorola Network Services, told the newspaper.
People will also be able to use the service to transfer money to each other. The report said. Motorola said the feature could save consumers money if the carriers charge lower fees than banks for money sent abroad.
M-Wallet also addresses the needs of companies to market their goods and services, Motorola said in a press release. Merchants can issue virtual loyalty or gift cards directly to their customer's mobile phone. These cards can be redeemed via a mobile phone or can allow customers to conduct secure point-of-sale transactions, collect loyalty point and obtain store receipts at existing retail merchant locations. M-Wallet users must opt-in to receive coupons or other promotional services, allowing them to choose preferred merchants who participate in the program and thereby reducing spam.
Consumers will be able to navigate through the service by clicking onscreen icons. Once basic credit-card and banking information is entered, transactions can be conducted quickly. Along with the M-Wallet application, Motorola will be selling carriers a service that will help them manage the financial transactions, the report added.
There are other limited experiments in pay-by-phone services, said the Journal. Cingular Wireless has been running a trial in Atlanta's Philips Arena that allows season-ticket holders to use Nokia 3220 mobile phones equipped with a special chip from Philips Electronics NV to purchase food and drinks during events. The consumers must have Chase-issued Visa credit-card accounts. In 2004, Japanese phone company NTT DoCoMo Inc. introduced a mobile wallet that could store up to $450 in credit as well as numbers for certain credit cards so that people could pay for products at participating retailers using only their phones. When outfitted with optional chips, Samsung Electronics Co. phones in Korea and Nokia Corp. phones in Hong Kong can perform electronic transactions in transit systems and at some retailers and vending machines.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.