The bank for a changing world

It seems the only thing the smartphone has yet to replace is cash. That might soon change if a newly launched Japanese initiative, headed by government and industry representatives and aimed at expanding Japan's international cell phone market presence, is successful.

Headlining this technology is the popular wallet phone (osaifu keitai). A FeliCa chip, developed by Sony, embedded in the phone allows users to use the phone like a cash card, paying for items at in-store or vending-machine reader devices. Wallet phones can also be used as membership cards, rewards cards, concert tickets, and . . . door keys. Japanese users can even use the wallet phone to check in at the airport.

Money can be put on the phone through in-store machines, or can be tied into a credit card account; transaction histories and account balances are available on the phone's display. Wallet phones have been available in Japan since 2004, and there are more than 15 million wallet-phone subscribers in Japan.

Although Japan's cell phones are among the world's most sophisticated, they have failed to have international success. High speed internet connections, free digital TV and video downloads are standard on Japanese phones, and more than 90% of mobile customers use 3G networks. Third generation (3G) technology will make Japanese cell phones compatible with overseas use.

U.S. banks remain lukewarm on forms of contactless payment like wallet phones, but momentum might be growing. 40,000 – 45,000 locations use the same technology, Near Field Communication (NFC), as the wallet phone. The infrastructure has to greatly increase before an American wallet phone can succeed — unless of course they could get Apple's imprimatur.

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