Cellphones as Credit Cards?

I have been using the PayPass with my American Express for a while now. It is convenient; you don’t hand your card over, so less chances of forgeting it or fraud, it is faster than sliding and usually for smaller amounts no signature is required.

So, when I read “Cellphones as Credit Cards? Americans Must Wait” I was “come on, there is enough money to be made! share it!”. The problem:

“In Japan it was easier,” explains Gerhard Romen, director for corporate business development at Nokia. “It was just the major guys saying, ‘This is how it will be.’ ” A single carrier, NTT DoCoMo, accounted for more than half the Japanese market at the time the system was rolled out and thus had significant leverage with financial institutions and handset manufacturers.

This is not the case in the United States. For such payments to work here, cellphone manufacturers, carriers, financial institutions and retailers must all play roles. There also must be some sort of intermediary that is trusted by both the financial institutions and the carriers to activate the virtual credit cards inside the phone.

Free market is a bottle neck and as I noted in my earlier post it doesn’t lead to very cheap access w/ comparison to some Asian countries.

Cellphones are being used in Japan to make credit card payments over the counter. It saves money, plastic and some butt pain.  Money and plastic because once the technology becomes pervasive people can ask for credit cards to be activated over the phone and credit card comapnies don’t need to ship them. Butt pain as now you don’t need to carry credit cards in your wallet. And nobody forgets the cellphones these days, so they are never out of money!

On the downside, I would like to digup how secure this is. Today, most gas stations ask for your zip code and if one gets his/her hands on my phone it easy to get the phone number and from there the zip code. And I hope short range is really short range like touching the keypad or else, folks would setup shop to run your credit card bills high remotely.

Let me see if I can find some folks in Japan and ask how it works.