June 27, 2003

Will new payment systems arise with the convergence of technologies? Is the threshold to wide acceptance too high? Are the benefits too minor to justify abandoning traditional payment methods?

Today, we see the emergence of powerful chips with built-in secure identification, strong encryption and data handling possibilities, as well as industry initiatives such as Bluetooth, which seeks to allow fast radio-frequency communication over very short distances (e.g., room-to-room) among all sorts of electronic devices. Moreover, there is the ever-greater presence of digital mobile devices that incorporate a user-activated chip, a keypad and a display, and operate in wireless networks with ever increasing capacity and speed. There is also wide agreement on international mobile standards. Indeed, the typical GSM handset includes features that already allow it to function as a debit card or cash if the services are available.

What could be easier and more secure than pulling out your phone, letting it communicate with the checkout-stand computer to get an itemized purchase and sum? All you would do is push a button your phone to approve the payment. In Web-enabled phones, you can go online, find a hotel in another country and pay for the reservations all in a single transaction and for the cost of a local call. You could also use your phone to repay a small loan from a friend by selecting the payment function on the mobile phone and keying in your friend's bank account number and the sum, and pushing "pay." All this is technically feasible today.