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NTT Docomo Pioneers the Cell-Phone Wallet in Japan

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NTT Docomo Pioneers the Cell-Phone Wallet in Japan

In a country where cash is king and almost everyone owns a cell phone, Japan's NTT Docomo led a major drive into mobile e-commerce, or m-commerce. The mobile phone carrier pioneered the use of "near field communications" (NFC) chips inside its cell phones, enabling them to exchange data wirelessly over a few centimeters. More than 54 million people subscribe to Docomo 's wireless voice network, and they can all pay for their cappuccinos at participating stores by tapping their cell phone against a special terminal or just waving it nearby.
When a customer taps the cell phone to pay, the expense is automatically logged into a digital expense report and charged to the customer's account. Called osaifu keitai in Japanese, the cell phone wallet frees people from carrying cash. Consumers use their cell phone wallets to buy subway, train, and airline tickets, and the phone's chip also serves as an electronic key to control access doors to buildings or homes. Cell phone wallet holders can check their balances, loyalty point totals, and purchasing history from the handset and receive promotional discounts.
Visa and MasterCard have offered NFC payment capabilities on key fobs and cards in the United States and other countries, and some wireless carriers are promoting chips that stick to the back of existing cell phones or their cases. NTT Docomo's approach has far more potential because of the phone's processing power and communications features. The software can combine and integrate data, including location, from many sources.
The technology to pay bills and buy products by mobile phone is well established, but the use of the cell phone to handle in-store transactions and track purchases and reward points is still in its infancy in most countries. Analysts predict that most cell-phone manufacturers will soon embed the chips in their handsets, transforming in-store payments and marketing. Although NTT Docomo had to take over a bank to build its osaifu keitai service, other carriers will probably partner with credit card companies, with their extensive fraud-protection capabilities. A new ecosystem is evolving in which financial institutions, wireless carriers, brick and mortar retail stores, technology companies, savvy online marketers, and innovative start-ups will be vying for a piece of the cell phone market and all its services. As NFC become commonplace on cell phones around the world, those lines at checkout counters may get shorter and shorter, and real wallets stuffed with credit cards, loyalty cards, photos, and cash may become extinct.

1) What are the potential benefits of this technology for consumers? What are the potential benefits for retailers?

2) What are the risks for consumers and retailers? What are some ways that these risks could be overcome?

3) How could this technology impact the telecommunications and consumer banking industries?

4) Do you believe this technology would work in the United States? Why or why not?

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NTT Docomo Pioneers the Cell-Phone Wallet in Japan

In a country where cash is king and almost everyone owns a cell phone, Japan's NTT Docomo led a major drive into mobile e-commerce, or m-commerce. The mobile phone carrier pioneered the use of "near field communications" (NFC) chips inside its cell phones, enabling them to exchange data wirelessly over a few centimeters. More than 54 million people subscribe to Docomo 's wireless voice network, and they can all pay for their cappuccinos at participating stores by tapping their cell phone against a special terminal or just waving it nearby.
When a customer taps the cell phone to pay, the expense is automatically logged into a digital expense report and charged to the customer's account. Called osaifu keitai in Japanese, the cell phone wallet frees people from carrying cash. Consumers use their cell phone wallets to buy subway, train, and airline tickets, and the phone's chip also serves as an electronic key to control access doors to buildings or homes. Cell phone wallet holders can check their balances, loyalty point totals, and purchasing history from the handset and receive promotional discounts.
Visa and MasterCard have offered NFC payment capabilities on key fobs and cards in the United States and other countries, and some wireless carriers are promoting chips that stick to the back of existing cell phones or their cases. NTT Docomo's approach has far more potential because of the phone's processing power and communications ...

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NTT Docomo Pioneers the Cell-Phone Wallet in Japan

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