RealTime IT News

Paying by Cell a Tough Proposition in The U.S.

No shirt. No shoes. No service. No cell phones? Some retailers ban their use, because, well, they can be annoying.

But that could change if they begin to act more like digital wallets, zapping payments from their users' hands to retailers' tills.

Consumers in Japan already enjoy these cell-to-sales phone payments; they can buy soft drinks from street corner vending machines.

And Wireless carrier NTT DoCoMo in April snapped up a 34 percent stake in Sumitomo Mitsui Financial Group's credit-card business, Japan's second largest, signaling an even greater interest in the movement.

But the dialing of dollars in the U.S. may take a bit more time, as carriers on this side of the world struggle with internal politics and a creaky wireless infrastructure.

"Dealing with the carriers is very difficult because you are talking about a lot of legacy from the Ma Bell corporate culture and the technology infrastructure," said Nathan George, channel manager for Trio Teknologies, a developer and distributor of wide area network (WAN) solutions.

Developers are also reluctant to create mobile applications while carriers struggle with customer churn and non-voice billing issues.

"The carriers do such a poor job of billing customers today that it would take months just to add a single service or new vendor to their menu," said George.

Developers must also deal with competing operating systems, differing development environments, and security issues.

"So, it's very difficult to develop an application that is broad enough to gain industry support," added George.

But some third-party developers are moving forward despite the challenges.

One of these is MobileLime, based just outside Boston, Mass.

The company developed a wireless customer-loyalty system that allows retailers to send alerts and offers to cell phone users who opt into the program.

San Diego-based Black Lab Mobile in March introduced a service called "billmycell," which lets consumers use their cell phones to transfer cash and pay for services.

Consumers sign up by registering their bank or credit card information and linking the cell phone to the account's PIN.

The system was used late last year by the San Diego Symphony for ticket sales by consumers who used their cell phone for purchases and e-ticket confirmations.

While this may sound convenient, most experts believe that, in the short term, mobile phones will serve as identification and authorization tools rather than true mobile wallets.

"The mobile phone can play a valuable role as a second factor in the authentication process," said John Brand, founder and CEO of Identrica, which specializes in two-factor security systems.

In such a system, a retailer might send a unique and encrypted code to a customer's cell phone to authorize a credit purchase.

This code could then be redirected to a retailer's terminal, via Bluetooth or some other short-range communications technology, or even scanned from a phone's LCD screen.

Mobile billing solutions provider mBlox takes a different approach by using cell phones to authenticate and verify credit transactions.

Bounce a check, for example, and your mobile phone will ring you up that you are short on cash, mBlox president Jay Emmet told internetnews.com.

Use your credit card, and your phone may get a text message asking if you are the one holding the plastic.

Identrica's Brand expects this to remain the cell phone's major function in remote-access commerce for a while. Whatever takes the lead, it's a far cry from a simple "Hello?"

Additional reporting by Erin Joyce.