Steve Quayle News Alerts

July 19, 2004
By Yukari Iwatani Kane

TOKYO (Reuters) - Look inside almost anyone's purse or pocket, and it probably contains at least a mobile phone and a wallet bulging with bills, coins, receipts, credit cards, IDs, train or bus passes and any number of membership cards.

In Japan, that may soon be a thing of the past as the mobile industry aims to combine the two with a small embedded chip that can also store money and personal information.

NTT DoCoMo Inc., Japan's largest mobile operator, on Saturday became the first operator to launch a wallet phone, equipped with Sony Corp's FeliCa smart chip, which can be quickly read by passing it over a scanner.

No. 2 KDDI Corp. plans to launch phones with similar functions next year, while the Japan unit of Vodafone Group Plc is testing the technology.

"FeliCa is going to be a basic requirement for me when I upgrade my phone," said 31-year-old Norihiko Fujimori, who works for a Japanese Internet startup in Tokyo. "It'll be extremely convenient if my phone can contain everything."

GETTING RID OF COINS AND SHAVING TIME

The concept of a wallet phone is just getting off the ground, but the smart chip technology is not new in Asia.

Tokyo commuters have used "Suica" train passes with an embedded FeliCa chip for nearly three years, and 9,000 convenience stores, restaurants and retail outlets around the country accept pre-paid rechargeable debit cards known as Edy.

East Japan Railway Co.(9020.T), which plans to offer mobile Suica late next year, said it has over 8 million Suica users, while 4.5 million Edy cards have been issued.

"The biggest advantage of Edy is that it gets rid of coins ... and transactions are faster," said Takashi Nakamura, manager at bitWallet Inc., which operates the Edy network.

"Users are also attracted to additional benefits that retailers offer like special discounts, membership points or mileage in the case of ANA (All Nippon Airways Co. Ltd. (9202.T))."

Nakamura said it was too early to consider taking the technology overseas to Europe and the United States, but admitted that bitWallet decided on the name "Edy," which stands for euro, dollar and yen, with global ambitions in mind.

In other parts of Asia, Hong Kong residents use "Octopus" smart cards to access trains, buses, and ferries or pay for merchandise or parking. Singapore also has a similar system.

"I can see phones embedded with FeliCa chips taking off in almost any city with a large population and a need for efficiency," said Kazuyo Katsuma, a Tokyo-based telecoms analyst with J.P. Morgan.

Katsuma added that the relatively cheap cost of both the chip, at a few dollars each, and the initial set-up cost for the retailer, at a few hundred dollars each, are also in its favor.

SMART PHONES AS MONEY, ID, HOUSE KEY

In Japan, expectations are high that FeliCa will change the way consumers and businesses function on a daily basis.

Videogame maker Sega Corp. (7964.T) tested a service in which customers at its entertainment centers can use FeliCa-compatible mobile phones to play games.

Credit card company JCB gave employees mobile phones that could be used as company identification cards and for purchases at vending machines and in the company cafeteria.

Financial services firm Kokunai Shinpan Co. Ltd. and real estate company Hayakawa Fudosan provided residents of a new apartment complex in southern Japan with FeliCa-equipped phones that function as keys to both the main entrance and their homes and can be used to pay bills when swiped against a reader at the building entrance.

Convenience store chain am/pm Japan Co. Ltd., a subsidiary of Nippon Mining Holdings Inc. (5016.T), said it asks Edy users, who sign up for its frequent user club, to provide basic information such as age to identify purchase trends and help with supply decisions.

While some consumers express concerns about carrying phones that contain electronic money and personal information or having their purchases monitored, J.P. Morgan's Katsuma said it was no different than carrying a wallet or credit card.

"Everybody doesn't need to carry them," said Katsuma. "Only people, who are into that sort of thing or are high-end users, should use them. It's like an airline mileage membership."

http://news.bbc.co.uk/2/hi/technology/3906823.stm