• by Steve Smith , Staff Writer @popeyesm, September 1, 2005

Already a camera, a personal digital assistant, a portable game console, and soon an MP3 player, there is really only one thing left for the mobile phone to become - a credit card. Rest assured, with 180 million mobile subscribers in the United States alone, designers are working overtime to turn a cell phone into a direct payment device for everything from porn to convenience store purchases.

As with most wireless developments, the approach is already de rigeur in Asia and Europe, where thirsty customers can use an SMS (short message service) message to buy a soda from some vending machines. The limited number of SMS price points and domestic tax policies on phone purchases may limit this approach in the U.S., however.

Whether phone carriers are ready to become credit card companies and open up their billing mechanisms to a wider range of services is another matter. The most likely near-term scenario is "proximity payments," where phones with embedded NFC (near field communications) chips automatically pay for small-ticket items like parking fees or fast food when you hold the phone close to a vendor's recording device.

Japan's mass transit system already employs this approach, and virtually all handset vendors will deploy NFC models like the recent Nokia 3220, which is being tested in Europe. In the west, NFC will likely piggyback on the emerging "contactless" credit card systems in 2006, says Eric Michielsen, director, RFID and ubiquitous networks, ABI Research.

The same technology can trigger coupons or movie trailers when you enter different venues. "The phone is evolving into a comprehensive personal device," says Michielsen. Yeah, a talking credit card.