Cell Phones Will Morph Into Wallets By 2012

U.S. consumers are moving closer to being able to use their cell phones as mobile wallets, according to a new study.

The report, by technology research firm In-Stat, projects that by 2012 between 8 million and 30 million customers in North America will be making contactless payments via cell phone. The key is incorporating the short-range wireless technology into handsets and payment systems that make such transactions possible.

In-Stat expects progress to be made toward that goal this year as handset manufacturers, carriers and other companies overcome technical hurdles to implement near-field communications (NFC) technology. "The groundwork is being laid by a lot of companies really moving toward that, but it will take a while for the infrastructure to get built," said In-Stat analyst David Chamberlain. "The most important thing now is getting people accustomed to using cell phones for other types of financial transactions."

He noted that at least half the mobile phones in the U.S. can handle online banking transactions. But most cell customers still use phones mainly for talking or sending text messages.

The most advanced market for contactless payments is Japan, where about one-third of cell subscribers use their phones as mobile wallets. "NFC technology is what's being used in Japan, and it's been very successful," said Chamberlain. "That's the market we want ours to eventually look like."

During the last six months or so, handset makers have agreed on technical standards for installing NFC technology in phones. But now they have to work with payment technology companies to come up with a complete system for using a phone like a debit card. "These two systems--the big cell phone companies and debit card systems--are both headed in the same direction, which is toward contactless payments," he said.

Just don't expect to see anyone zipping through the checkout line with a cell phone anytime soon.

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