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Smart Card 2000: m-commerce has arrived

If you've never thought about buying something through your mobile phone, you soon will - that is, if such companies as Visa International, American Express or any of the major mobile phone companies have anything to say about it

With the number of mobile phones skyrocketing across Europe, e-commerce over a mobile -- or m-commerce -- is the latest hot buzzword engulfing the rather specialised smartcard industry. And between Tuesday and Thursday at London's Olympia, vendors dealing with everything from biometrics (using your face, fingerprints or other anatomical features as electronic identification) to banking to semiconductors are meeting to figure out how to get in on the m-commerce act.

"The mobile phone may become the Visa card of the future," says Bruno Begiovanni, senior manager of new channels with Visa EU. "If we can put together a secure, easy to use method of paying over a mobile, then it becomes a great application for our customers."

The key word is security, the raison d'être of the smartcard business. The idea is that for remote buying using either a phone or the Internet, it's not that difficult for fraudsters to impersonate others. But a smart card, and its embedded chip, makes credit card crime much more difficult: users could have a smartcard reader attached to their PC or connect a smartcard directly to their mobile.

There are two main m-commerce technologies being looked at right now: so-called "dual-slot" phones, which use a credit-card-sized smartcard with a reader, and 'dual chip' phones, which have a second SIM card like the one most mobiles have today. In both cases the second chip stores payment information and transmits it directly and securely to the vendor.

Mobile phone giant Nokia, is currently testing a pilot of Visa card payments via a dual-chip GSM mobile phone. "Soon, mobile phones with wireless Internet capability will be in almost everyone's pockets, building the basis of a truly mobile information society," says Yrjo Neuvo, executive vice president and chief technology officer of Nokia Mobile phones. "Global security brands established by leading payment associations and financial institutions will have a crucial role in paving the way for consumers to adopt mobile commerce."

Set-top boxes for interactive television are seen as another major potential market for smartcards.

Right now interactive TV companies such as Open already have security by operating in a "walled garden" -- that is, they handle all the connections and transactions themselves, and don't allow users onto the Internet.

Open, which hit a peak of £1m a week in sales over the Christmas season, sees this security technique or principle behind its early success: "E-commerce hasn't lived up to the hype," says Richard Cass, Open's business development manager, citing a study that suggests 18 percent of consumers are comfortable using credit cards online.

But many see i-TV as inevitably opening up to the Internet, much in the way America Online has allowed Net access to its users. And when that happens, smartcards could become crucial to maintaining users' sense of security -- which could be why Open and other set-top box vendors have taken the step of including smartcard readers in their hardware. "Once you want to surf the Internet, then you'll face the same (security) problems as you do with a PC," says Visa's Begiovanni.

If set-top boxes and mobile phones have risen into the limelight, the notion of electronic cash hasn't fared so well. From its height two or three years ago, when e-cash embedded on a smartcard was seen as a solution to the problems of small Internet payments and international currency purchases, interest in the technology has flagged markedly.

That's partly because banner ads, rather than small e-payments, have emerged as the way most Internet content is paid for. "Three years ago we felt there was a compelling need for micropayments," says Bernard Ovink, Visa International's executive for the EU region. "Now... we don't see true micropayments as having a strong demand to find a solution instantly."

Analysts do, however, still see the emergence of the euro as driving the adoption of e-purses.

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