Canadian cellphone companies not only want to get into their customers' wallets, they want to become their customers' wallets — but they have their work cut out for them.
So far, Canadians have been content to use their phones to make wireless payments for a limited array of products, such as ring tones, parking spots and occasional items from on-line stores. The industry's challenge is to persuade them they can do much more, and do it securely.
“People take three things with them when they leave the house: their wallet, their phone, and their car keys or house keys,” says Nathan Rosenberg, Virgin Mobile Canada LLC's chief marketing officer.
“They haven't really seen the link between the phone and the wallet.”
That's true in Canada, where the wireless wallet has yet to appear on most subscribers' screens. They are more interested in customizing their cellphones with ring tones, and downloading video and music. But in technology-crazy Japan, consumers reach for their cellphones to buy drinks out of vending machines and shop in convenience stores.
Industry players say the technology is here, although most consumers would need to buy new phones. The companies also will have to address concerns about cost and security to win over subscribers.
“It would have to have pretty good security features,” said Elizabeth Sutherland, a 29-year-old nurse in Toronto. She pointed to prominent security lapses such as when someone hacked into hotel heiress Paris Hilton's cellphone and posted her address book full of celebrity contacts on the Internet.
Not all wireless carriers are convinced there will be a market for mobile wallets. While Bell Canada consumer groups say features such as downloading music, playing games, and customizing their cellphones are at the top of their lists, a cellphone wallet is far down.
“I'm not sure one more way to pay for something is actually something that is extremely in demand right now,” says Ken Truffen, director of wireless data development at Bell Canada.
Mr. Truffen thinks it will be hard to compete with the very popular Interac direct debit service. Supporting his view, Ms. Sutherland said a cellphone wallet would have to measure up with Interac for her to try it.
“As long as its successful everywhere like debit, I'd probably work it into my life,” Ms. Sutherland said. “It means less things that I have to carry, and it's more convenient.”
But those hurdles are not stopping some industry players from dreaming of a world where consumers will use their cellphones to pay for soft drinks, movies, groceries and other items. They are betting on the convenience afforded by a cellphone wallet and the growing demand for these payment options as more consumers sign up for wireless service.
Virgin Mobile, for example, is scheduled to start a pilot program over the next few months that would let its subscribers download a bar code to their cellphones.
They could then take their cellphones to a store and would get a special deal on merchandise such as DVDs by scanning their phones at the checkout, eliminating the need for yet another loyalty card in their wallet.
“If you take baby steps in the program and just allow people the opportunity to see a link between transactions and your mobile phone, that gives you the opportunity to explore more with customers how it might benefit their lives in the future,” Mr. Rosenberg says.
This year in North America, Motorola Inc. will conduct a trial of MasterCard PayPass technology that will let consumers use their handsets to pay for purchases. In addition, Nokia Corp., which is also working with MasterCard PayPass, is trying with carriers in Canada to figure out how to enable some wireless payment options.
And Canadian wireless carriers are performing trials on a system that would allow subscribers to purchase soft drinks out of vending machines with their cellphones.
“We're still a couple of years behind in terms of [wireless] penetration [compared] with what Asia and Japan is,” says Tejas Rao, director of technology for Nokia Canada. “As you see that penetration going to the 60- to 70-per-cent mark, that's when I see a lot more take-up of some services.”
In Japan, wireless giant NTT DoCoMo Inc. already has a mobile wallet service, which lets subscribers use their phones to purchase goods in a nationwide convenience store chain, pick up tickets for the movies, and buy airline tickets and check in for international flights with All Nippon Airways Co. Ltd. They can also buy drinks from 3,000 Coca-Cola Co. vending machines across the country.
All they need to do is load money electronically on to a cellphone that is equipped with a special chip. When they are ready to make a purchase, they wave their handset in front of a terminal in the store, and the money is deducted from their account.
It's not yet clear how Canadian wireless carriers will offer cellphone payment services. The security features for cellphone transactions could include a PIN number that users would enter each time they made a purchase.
Tomorrow: The cellphone's computing challenge
