The ability to use your phone like a credit card is fast approaching and there are a number of new technology companies out there all vying to be first off the blocks in the mobile payment race. One of these is Paybox, which works across any phone and banking system. Once customers register their bank details they can then make payments simply by giving out their phone number. The shop assistant keys this into the till and it triggers an automatic phone call from Paybox which asks customers to authorise the purchase by entering a pin number into their phone. UK sales and marketing vice-president Barry Shrier says: "We have the first fully operational system to pay via your mobile phone. We think people feel more comfortable giving out their mobile phone number rather than a credit card number." He claims the system offers a higher level of security, with thieves needing not just the phone but the customer's personal number to make transactions. However, at the moment the majority of retailers signed up to the scheme are online traders, although Shrier says they are beginning to move off-line and have been talking to some of the multiples. Shrier says the fact that over 500,000 consumers across Europe have signed up to the system since its launch just over a year ago in Germany is a great result: "You might say that's nothing compared to 25 million credit card users, but it took 25 years to get Visa to sign up half a million consumers. It's taken us about a year, and there are 31 million phone users in the UK alone." Paybox, although claiming to be the first to market with a viable system, is not alone in its ambition to turn the phone into the wallet of the future. Finnish handset manufacturer Nokia has launched a mobile wallet application which allows all details to be encrypted and stored within the phone itself. At the moment this system is designed to allow wap users to make purchases online simply by typing a four-digit pincode into the phone, which then releases their credit card details and address to the e-tailer. However, Nokia spokesman Mark Squire says that with Bluetooth' wireless technology, the potential exists to transfer the scheme off-line allowing customers to pay at the till by beaming the information direct from their handset. "Eventually, with this system, it could mean people could go out without taking their wallet." The idea of mobile phones replacing the credit card is certainly something that appeals to Safeway's business systems manager Jeremy Wyman. "It does make a lot of sense," he says. "It would save time, for example, when it comes to people making very small payments, or buying their lunch. "They could just text us the money instead of messing around with finding the cash or getting out their card and then signing the receipt, so it would be quicker." Wyman stresses that, in theory, the idea has a great deal of scope when it comes to improving customer service, but at the moment there is no system out there that is viable. That's a view echoed by most of the supermarkets. A Tesco spokeswoman says: "We're always looking for ways to make it easier to pay at the checkout because that is what our customers want and when anything new comes along we'll certainly look at it." However, she adds at the moment there are concerns that the current technology wouldn't be fast enough and that there are also issues over what fees would be charged, but says it is an area they are keeping an eye on. Safeway's Wyman adds: "It's not quite there yet, but we want to be on top of it when it comes together." Of course, the supermarkets are also in a position to take it one stage further, according to PriceWaterhouseCoopers analyst Sandy Aitken, who says the multiples should be thinking about taking on the network operators at their own game: "The supermarkets have a fantastic opportunity. Sainsbury could have customers paying for their shopping with a Sainsbury phone. They would be making money from the phones as well, and it would provide it with excellent marketing opportunities." Sainsbury has already taken a step in that direction by operating its own virtual network, Sainsbury's Mobile, although a spokesman says it has no intention of extending that system to payment at the moment. The speed with which text messaging caught on certainly suggests that people are capable of adapting to new uses for their phones ­ but does that extend to using them like credit cards? Visa's wireless commercial marketing manager Brian Geary acknowledges this is a serious challenge: "There is a big mindset change to move from the phone being a communication device to a paying device. Some people who are into technology will adopt it early on, but we'd need more than just the early adopters." Duncan Brown, consulting director with Ovum, agrees: "Getting people to pay with a phone means changing the habits of paying by card or cash that have been around for generations and that's a hard thing to do. I don't think the majority of people are ready for it." He also points out that some people may be more reluctant to hand out their phone number than their credit card number, for fear of receiving marketing calls or being spammed' by text messagers. But, much like text messaging caught on in the playground first before spreading to older users, payment could well be driven by the younger phone users first. Accenture's u-commerce ( ubiquitous commerce') expert David Durdan says: "I think the youth market will drive uptake of this device. Younger people are going to take it up first. However the final mechanism has yet to be determined, the winning combination of technology has yet to identified. I'm not convinced Bluetooth will be the answer, it has yet to prove itself. "A lot of these schemes are a bit convoluted, it's almost like they're desperately looking for a way to use the handset as a wallet, but it's not, it's a handset." PWC's Aitken is more optimistic. "In the past people have always waited for the technology to become available, but that's not the case here. Everything's there, it's just a matter of sorting out the business issues." In other words, the age-old argument of who's going to foot the bill. One group working to resolve those issues is the Mobile Payment Forum, set up by American Express, JCB, MasterCard International and Visa International to create a framework to enable safe mobile payments. According to Geary, the forum is about getting people together to create compatibility between all the various systems. The forum involves leading figures in the technological, telecommunications and financial sectors, but Geary says it's still in the early stages: "This is a long-term initiative, there's a big need for all systems to be inter-operable. For instance, Orange subscribers don't all bank with the same bank and that creates a definite need for interoperability." A complicating factor is the sheer number of organisations who would be involved in setting up any system. Rather than just involving the bank and the retailer, it has the potential to include everyone from the handset manufacturer to the software providers and the myriad telecommunication companies. Just the logistics of getting everyone together is a challenge in itself. With the length of time it could take to push a system through, the whole concept of mobile phones and mobile communications could have changed radically. And with smartcards on the horizon, set to provide safe secure payments, radio frequency tagging and all manner of new technologies coming through, the idea of using a mobile phone to pay could be obsolete before it even gets off the ground. And, at the end of the day, are consumers interested in yet another payment channel? As Geary says: "At the moment our view today is that we have the perfect product which is the plastic card, but if there is a need to move that onto the virtual world, then we are ready for it. But I can't see phones replacing plastic cards." n {{FEATURES }}