Watch out for Your Wallet ... Mobile Banking

First it stole your wrist watch and now it's after your wallet... Will this high-tech bully ever give up?

Since the introduction of currency, the wallet has become an essential standard accessory for keeping pocket clutter in check. And although we're certainly carrying a lot more plastic than a hundred years ago, the wallet has remained essentially unchanged for the last century. With the success of mobile banking and payment systems in Japan and Korea, do Canadian wallets have anything to fear?

First it's important to make a distinction between mobile banking and payment. Although mobile banking has been available for years through various SMS and WAP services, the first modern mobile banking system based on integrated-circuit chips embedded into mobiles was introduced in 2003 through a partnership of South Korea's LG Telecom and Kookmin Bank. Their BankOn service allowed for the conducting of simple ATM operations (checking account balances, withdrawing or depositing funds) through a mobile application interface. Korea's other major carriers quickly followed suite and currently all offer plans with partnered banks for roughly KRW800 a month (approximately CAN1.00) to ten million subscribers.

The current form of mobile payment was launched by the Japanese carrier DoCoMo in 2004. Using FeliCa smart chips developed by Sony, equipped mobiles could be used to pay for purchases by swiping them in front of special wireless readers embedded into cash registers or through DoCoMo's existing data network. Current mobile payment chips support a range of interactions including touch and go, touch and confirm, touch and explore or touch and connect to accommodate a variety of purchasing options.

As a starving student, perhaps you'll forgive my lack of interest in mobile banking. The combined ubiquity of ATMs, cautious of the banking industry and prevalence of Internet banking in Canada will probably hinder any mobile banking revolution here in the near future. Mobile payment is applicable to a much wider North American audience. Imagine the ability for road tolls, groceries, transit passes ... anything, all just by flashing your phone. The strength of any payment solution rests in its widespread acceptance amongst consumer service industries. If I can't use mobile payment everywhere, why should I use it at all?

The greatest challenge mobile payment will face is bringing all interested parties successfully to the negotiation table. The fusing of the varying interests of mobile manufactures, carriers, banks, credit card companies, individual merchants and consumers will be critical to the success of mobile payment. Already the mobile payment consortium Simpay, who dreamed of bringing a unified mobile payment system to Europe floundered in 2005 over disagreements between its various members. Interestingly, part of the success of DoCoMo's original mobile payment system may have been in the fact that it side stepped credit card companies and banks entirely, opting instead to have customers top up prepaid accounts to purchase items using the service. It would seem no North American carrier has the resources (or initiative) needed to attempt such a solution.

In the short term, mobile payment in North America may be limited to a much different approach. With the advent of secure mobile web browsers, web-based vendors like Amazon and Ebay have an opportunity to offer mobile applications allowing for direct purchase and delivery of products through mobiles. Combined with online recommendations and reviews these mobile purchasing solutions could significantly cut into traditional brick and mortar store sales. If only someone ever got their act together and released such an application.

For now, your wallet probably has more to fear from pick pockets and toilets. Keep a close eye on it.

-jb