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The Honolulu Advertiser
Posted on: Thursday, July 22, 2004

Cell phones now come with buying power

By Yuri Kageyama
Associated Press

TOKYO — As it is, you don't leave home without it. In a world of cashless payment, why not simply make your cell phone a wallet?

In Japan, cell phones are turning into wallets, allowing for electronic payments for everything from lunch to playing a video game. This game machine in Tokyo accepts payments by phones with these smart cards.

Associated Press

Japan has long been phasing out the hassle of coins and bills with microchip-laden "smart cards," which allow for electronic payments for everything from lunch to the daily commute.

But even smart cards could be on their way out, their plastic presence overtaken by virtual-wallet technology now available in the everyday cell phone.

Other nations, led by South Korea, have so-called mobile commerce payment schemes in place that let people punch keys on their cell phones so that the devices trigger transactions.

But a series of phones going on sale this summer in Japan, for use on NTT DoCoMo's wireless network, are the world's first with an embedded computer chip that you can fill up with electronic cash.

The wireless company loaned me a P506iC handset from Matsushita Electric Industrial Co. and I was in business. Well, almost.

First I had to find a machine that's used to stoke smart cards with cash. They can be found in some convenience stores and offices in Japan. You place the phone in a special slot and slip bills into the machine. The phones have a 50,000-yen ($450) limit.

Now you can spend.

To pay you simply wave your cell phone within a few inches of a special display found in stores, restaurants and vending machines around Japan. A fairy-like tinkling sound means your purchase is being deducted from the embedded chip using radio-frequency ID technology.

It's instantaneous.

Unlike infrared or other mobile payment schemes that require clicks on the handset, you don't even need to open your clamshell-shaped phone, the style of choice here.

It's an idea that makes sense, given that almost every Japanese has a cell phone and relies on it so much that being stranded in the street without one almost causes panic. There are 81.5 million cell phones in this nation of 127 million people.

For the wallet phone tech to really take off, stores, theaters and restaurants that accept electronic payments need to become more widespread. They total around 9,000 in Japan so far, and the number is quickly growing.

To buy a diet Pepsi from a vending machine, I pushed an "electronic payment" button on the machine and pushed another button to pick the soda. When a display the size of a small greeting card lit up with the price, I put my phone next to the display.

Shazaam. The soda pop rolled out, and the display blinked with the amount of money left in the phone.

To pay for my fried-rice lunch at a restaurant in our office building, I brought my bill to the register and told the clerk I wanted to pay electronically. When he rang it up, the little display lit up with the price. I just flashed my phone.

Computer experts have suggested that hackers could develop a way to pickpocket cell phone wallets merely by getting close to people's handsets. That hasn't happened — yet.

Another concern is that a telecom company — or a government — could find out too much about your spending proclivities and your physical movements. But other features on Japan's richly endowed cell phones offer marketers plenty of information on consuming habits as it is: Almost all phones have e-mail and Internet connections for restaurant searches, ringtone downloads, news and weather.

Later this year, Japanese credit-card company JCB Corp. plans to offer a service that will let corporate clients use chip-embedded phones as electronic keys to get into office buildings.

And if you lose your wallet phone?

Well, DoCoMo can lock it. Which means no one else can use it for calls. And no one else would be able to add more money to the cash-dispensing chip.

But whatever money is stored on the phone is like a virtual wad of cash. The clerk at the DoCoMo store repeatedly told me not to put any more money into the phone than I could afford to lose.