News From Telecom World

Paying for your shopping by mobile phone: A reality in 2008?

Posted on: October 22, 2008

M-commerce, the ability to purchase your rail ticket, groceries and newspapers by a nonchalant flip of your mobile phone, is soon to become a reality. No cash or credit card needed, just a contactless scan of your mobile phone to effect payment. If it doesn’t quite promise effortless shopping, it certainly implies reduced hassle.

There’s just one thing. This scenario sounds as compelling today as it did in 2000 and every year since. The fact is that most of us carry mobile phones most of the time and would have delighted in such a convenience years ago. So what’s different about 2008?

Basically, the technology required to make it happen is prevalent in a multitude of everyday electronic devices, causing the development of consumer-oriented applications to accelerate. And there are some massively successful examples of m-commerce in some parts of the world.

The basic technology is an RFID tag which comprises a memory, processor and antenna. When the tag is scanned by an RFID reader, the reader’s (radio) energy is converted into electricity which powers the tag. The tag receives information, updates its memory and sends back required information to the reader.

According to AIM Global (the worldwide industry trade association on automatic identification and mobility solutions) 2008 is the year when we will see the convergence of RFID with other wireless technologies which will lead to the integration of RFID into mobile devices and consumer electronics.

All passenger gates throughout London Underground have had Oyster Card (RFID) readers since 2003. But the real commercial leap forward came when an agreement between Transport for London and Barclays Bank catapulted the Oyster Card from a relatively dull but convenient method of paying for bus and rail tickets, into the forefront of e-commerce. It can now be acquired as a (contactless) credit card available for the purchase of rail journeys, coffees, snacks and other low cost consumables.

But to see the future in the West we need to look East and at (an RFID) technology called FeliCa developed by Sony and Japanese mobile operator NTT DoCoMo.

DoCoMo uses the FeliCa chip in a mobile wallet service. Rail passengers pass their phone over ticket readers in the same way that London Underground passengers wave their Oyster Cards. Topping up rail passes and making low cost purchases can all be made using a mobile phone. Its use is extensive. Even Japan Airlines enables passengers to generate boarding passes using their phone. In other far eastern countries the system is used extensively for City transport in Hong Kong and Singapore.

Even McDonalds recognise the value of mobile payment. Working with SK Telecom in Korea, the company is testing a new food ordering process. Customers place orders by pointing their (RFID-enabled) mobile phones at the items they desire which are then automatically charged to their phone bill.

There are examples of m-commerce in the U.K. The Light Agency’s discount club for shoppers – “Shop Scan Save” – sends special offers by SMS to club members on products from brands such as Mars, Nestle, United Biscuits and Walls. The offers can be redeemed at thousands of U.K. PayPoint outlets and other locations. The offers manifest themselves as barcodes on phone screens to be read by a scanner at the point of sale.

It is small scale compared to the Japanese initiatives, but it has nevertheless proven to be successful, with 17,000 independent stores across the U.K., demonstrating that the consumer is receptive to the concept of mobile assisted shopping.

In the near future as we travel escalators in underground stations, electronic posters may interrogate our RFID enabled mobile to display advertisements appropriate to our interest, enable us to make reservations and place orders. With such technology it would be relatively easy for a retailer to offer variable pricing, i.e. lower pricing when the shop is quiet and standard pricing when the shop is busy. Additionally, mobile operators could generate footfall for retailers by advising mobile users in their vicinity based on product interest. The technology to make this happen is here right now. The missing ingredient is a large-scale commercial model.

The operators are in an ideal position to own the m-commerce platform since they already have a user billing process, enabling purchases to be added to the mobile bill. However, it may a greater opportunity for the banks because of secure transaction processing.

With that in mind, one should look at the UAE, where Tata Communications has created a central hub to support the pilot of a Mobile Money Transfer service. It was created for UAE-based telco Etisalat and the UAE bank Mashreq, which is working in partnership with HSBC India. The other technology partner is Idea Cellular.

The Mobile Money Transfer service will enable customers with mobile wallets to transfer money from one (partner) bank account to another for the purpose of enabling Indian expatriates in UAE to transfer money to relatives back home. The service was piloted in April 2008 and is expected to be commercially available in June 2008.

But whatever the future holds there will be a requirement for safeguards in response to understandable concerns over privacy. It’s the reason why scientists at Vrije University, Amsterdam are working on RFID firewalls for the monitoring and controlling of access to information on personal tags and protection against viruses. And surprisingly such research may boost the likelihood of m-commerce as the technology needed to control external access to personal RIFD tags is likely to be required to be handheld. What better means than to integrate a reader with a mobile phone?

And in answer to the question, what happens if I lose my phone? Unlike a wallet, it can be deactivated quickly by the operator.

Richard Walker is chairman of Walkerstone Limited, a technology marketing consultancy.

Source: Total Telecom

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