Virtual credit card could boost m-commerce

A virtual credit card, unveiled Thursday by Trintech and Motorola, could accelerate the growth of mobile e-commerce by replacing cumbersome smartcard payment systems.

Motorola has partnered with electronic payment solution provider Trintech on a technology that financial institutions or service providers can issue to their customers to allow secure, straightforward transactions over mobile networks.

To use the virtual credit card needs only a simple configuration of a standard GSM handset, with no need to upgrade to a handset that accepts SIM cards. The need for a hardware upgrade in smart card-based mobile payment solutions has been seen as hindering the take-up of m-commerce.

Trintech head of marketing Barry Nolan, believes that the virtual credit card, in the form of a thin client that can sit on any mobile device with users' details held on the server side, offers an ease of use that will make users feel more comfortable carrying out mobile transactions. "If you had to fill in loads of forms whenever you bought something in a store you'd be reluctant to go shopping with a credit card," says Nolan.

The virtual credit card offers a one-click solution for completing all payment forms at online merchants and completing the transaction. A user can invoke their card by either using the keypad or, through Motorola's voice activation technology, use voice commands such as "buy" and "pay".

M-commerce is set to explode over the next two years according to analysts. A recent Durlacher report predicts that the European m-commerce market is expected to grow from E323m in 1998 to a massive E23bn by 2003.

Companies such as Ericsson, Visa and Mondex have been working on mobile payment solutions based on smartcard technology. The handset upgrade necessary for this solution convinces analysts that a form of virtual credit card will become the driver for m-commerce.

"This is definitely the way forward," says Falk Muller-Veerse, Manager of Durlacher Research's European operation, "You do not want any sort of card solution that you have to insert into a reader, you want it in the phone with details held on the server side."

In addition to having to change handsets, another disadvantage of the smart card approach is that "phones will also become bigger and bulkier," says Muller-Veerse.

Neil McEvoy, director at e-commerce consultant Hyperion, agrees that this form of electronic wallet solution does have "some mileage in it" and points to the success of such payment methods for traditional e-commerce. He believes that although the smart card approach may work, the problems involved with upgrading handsets will hinder take-up, so that "methods such as this [virtual credit card] that concentrate on a wallet function on the server side, have got legs".

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