Pay Up! Mobile Payment Heads to the States
By Eric Lin, Tue Oct 12 23:45:00 GMT 2004

Signs show that Contactless IC payment (FeliCa) is replacing wireless payment systems in Japan, but the two payment methods are about to go head to head in the United States -- at least to begin with.

Wireless Payments by SMS or micro-browsers have long been a mainstay in high mobile penetration markets like Japan. The most famous example of this is probably Cmode -- Coca Cola vending machines where thirsty users purchase soda using their phones. Following the recent announcement that KDDI would be joining DoCoMo's mobile payment effort by including FeliCa chips in future handsets, Coke is joining in too. New Cmode2 vending machines will support FeliCa chips, as well as current payment methods. However neither of these technologies are in widespread use in the US, and they are set to launch, or at least test-launch, nearly simultaneously.

Today AT&T Wireless announced a partnership with USA Technologies to bring e-Port, a wireless payment system, to stateside vending machines and other automated purchase devices. AT&T's part in this is minor, as it will simply provide the wireless access (over GPRS) for USA Technologies to send and process transactions. Vendors that choose to include e-Port in their machines or kiosks will only have to worry about electric supply and not a phone line, even if they want to enable credit card transactions on their machine. This is a more US-centric version of Cmode-like payments since the wireless aspect is part of the vending machine, not in a handset. Since mobile penetration has only recently crossed 50 percent in the US, and since different carriers have different capabilities and technologies, it is probably too difficult to rely on handsets for purchases yet.

E-Port may provide a stopgap until efforts to deploy Near Field Communication (NFC) systems like FeliCa have gained momentum. To that end, Motorola announced it would launch a few handsets that include Mastercard's PayPass, an NFC solution, in a few test markets. As on FeliCa handsets, PayPass equipped phones will include a secure application space allowing subscribers to use them for ticketing, public transportation and other situations in addition to payments. Nokia, Samsung and Visa have previously announced they would support this same protocol. Support from the top three manufacturers and two largest credit cards in the West should all but assure this will be the standard to replace the ubiquitous magnetic stripe.

Since it will be some time before NFC could dominate payment technology in the US, AT&T's e-Port partnership capitalizes on near-term demand for wireless payment. Like Cmode, this may even put AT&T and USA Technologies at an advantage when NFC takes off.