Coca-Cola is set to become the first major brand to champion mobile payment services, by joining up with NTT DoCoMo to pilot a mobile vending machine.
Trials for the "Cmode" service -- a play on the name of DoCoMo's i-mode Internet access service for mobiles -- will begin on 3 September in Japan and run until the end of the year. The service will allow i-mode users to purchase soft drinks from custom-designed vending machines without the need for cash, in effect charging the payment through to the i-mode billing system.
The DoCoMo interface has been particularly successful for mobile transaction services in Japan, but the launch of similar initiatives within Europe have been less successful. Virgin attempted to launch a cellular vending service with Ericsson last September, but they only got as far as designing the prototype.
While NTT DoCoMo's trial is based in Japan, the company recently opened its European headquarters in London, arousing suspicions that it is looking expand to Europe. The cellular operator had hoped to launch i-mode within Europe by March 2002, but claims to have been delayed by the slow rollout of GPRS services. NTT DoCoMo is, however, expected to be a big European player in the 3G roll-outs.
"The European mobile penetration rate is strong, but people still have coins in their pockets," said Lars Vestergaard, research manager for European mobile research at IDC.
An IDC report into m-commerce scheduled for publication next week will predict that the future for small payment mobile transactions in Europe will not take off until 2005. "We expect that [mobile transactions] will be very big -- there will be a lot of users and a lot of money involved, but this will happen at the end of our forecast period," said Vestergaard.
The principle of purchasing low-value products by SMS requires little technology, but consumers are often put off by a complicated buying process. Vestergaard argues that the service must be made as easy as possible to use, by users simply sending a clear message to the vending machine without having to punch too many keys. The Japanese trial will see the cost of the drink added to subscribers' phone bills.
Electronic payment applications are expected to be a key driver of Japanese mobile revenue growth in the next couple of years, but IDC predicts a greater struggle for the Eurpopean market. "It will be an uphill struggle for Europe, as the m-commerce concept is just starting to target areas where there is no mobile penetration a the moment," said Vestergaard. "Most pensioners, for example, don't even want to have a credit card -- IT is scary for them, and they insist on living in a cash-based world."
The success of mobile transactions in Europe will depend on big brands like Coca-Cola championing and marketing the idea. Coca-Cola Japan operates about one million of Japan's 2.4 million drink vending machines through its local bottlers. DoCoMo has more than 26 million i-mode subscribers.
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