Turning a Cell Phone Into a Virtual Wallet

June 8, 2004 -- With the addition of tiny camera lenses, computer chips and software, cell phones have become much more than portable communication device. But could your cell phone soon become your electronic wallet?

It's not as far fetched as you may think. Industry analysts and other insiders say mobile phone addicts — particularly in Europe and Asia — have already taken to buying things with their cell phones.

Naqi Jaffery, president of Telecom Trends International, a research firm in Falls Church, Va., says that so-called "mobile commerce" generated more than $6.8 billion in revenues worldwide last year. And a clear majority of the purchases were for "digital content" — special ring tones, games and images that can be ordered and installed on cell phones.

"Digital content is one of the fastest growing areas of mobile commerce," says Jaffrey. "And as people are becoming comfortable with the technology and concepts of buying and ordering items over their cell phone, the next step is [to get subscribers] using it for serious transactions."

Netpace, a mobile technology and marketing company in Union City, Calif., thinks it has a unique and simple way to get there. The key, says company officials, is its ReadySet platform, software designed to capitalize on another growing trend in the mobile phone market — text messaging.

"Wireless carriers have been successful with short messaging service (SMS), increasing average revenue per user" says Vajih Khan, co-CEO of Netpace. But ReadySet will help carriers build on that success by allowing for so-called "premium messaging" services.

The idea, says Khan, is that the ReadySet application allows SMS to be used for ordering items and services through special five-digit codes.

For example, an author on a late night TV talk show could announce an SMS code that would allow viewers to get a copy of the latest book. After sending an SMS with the code, the ReadySet program determines what goods or service is tied with the code. It then connects into a wireless carrier's "back-end" — the computers that track each subscriber's cell phone usage for billing purposes — to determine where the item should be sent. The cost of the book is then added to the cell phone user's monthly bill.