We are entering a new era of payment technologies that could have you reaching for your mobile phone instead of your wallet at the checkout counter. The Mobile electronic Wallet (MeW) application will enable your mobile phone, PDA, Smartphone (combination PDA and mobile phone) to store and use financial tools (i.e. electronic credit cards, cash, checks, and receipts) at the point of sale, or Local Transactions (LTs). To initiate an electronic payment you simply press a button on your mobile device. Within seconds your transaction is completed and an electronic receipt is stored within your device.
There are several industry groups currently working to create a single set of standards for worldwide compatibility of mobile local transaction solutions. These groups include:
Infrared Data Association’s (IrDA)
Infrared Financial Messaging Special Interest Group (IrFM SIG)
Infrared Financial Messaging (IrFM) is an international standardization initiative of IrDA whose key participants are Palm, Nokia, Agilent, Ericsson, Motorola, Sharp, Infineon, Extended Systems, Hewlett-Packard, Zilog, Visa, Vishay Telefunken, Harex InfoTech, VeriFone, and CrossCheck. The IrFM protocol defines payment usage models, profiles, architecture, and protocol layers to enable hardware, software, and systems designers to develop IrFM-compliant products that are globally compatible. Electronic wallet applications where users beam their financial information to make a payment and receive a digital receipt have been demonstrated using IR-enabled Palm and Handspring Visor PDAs.
Mobile Electronic Transaction Forum (MeT Forum)
MeT is an initiative started by Ericsson, Motorola, and Nokia to establish a framework for secure mobile transactions (ability to buy goods and services using a mobile device).
Bluetooth Special Interest Group’s (Bluetooth SIG) Short Range Financial Transaction Study Group (SRFT SG)
The Bluetooth SIG SRFT Study Group is a research group within Bluetooth examining the development of a profile that improves the device discovery and connection times for short-range financial transactions at the point of sale. Key participants include Toshiba, Tech, Verifone, Panasonic, and IBM.
National Retail Federation (NRF)
The Association for Retail Technology Standards (ARTS) of the National Retail Federation is a retailer-driven membership organization dedicated to creating an international, barrier-free environment for retailers. ARTS was established in 1993 to ensure that technology works to enhance a retailer’s ability to develop business solutions while maintaining industry standards that provide greater value at lower costs.
There has been much discussion among analysts about the use of RF (radio frequency), rather than IR (infrared), for short-range data transfer. One such wireless protocol that has been getting a lot of attention in the past few years is Bluetooth. Originally developed by Ericsson in 1994 and named for Harold Bluetooth, the Viking king who united Denmark and Norway in the 10th century, Bluetooth uses a short-wave, always-on radio signal that lets devices of all kinds communicate with one another, including mobile phones, printers, laptops, and PDAs. Since it uses RF waves, communication doesn’t require a line-of-sight connection between devices, as does IR. Unlike IR, Bluetooth can travel through non-metal obstructions like furniture and walls, send signals in all directions, and be initiated by the devices themselves. The biggest buzz about Bluetooth is centered on the era of “personal area networks” that this technology promises to create. The thinking behind this is that once Bluetooth components become inexpensive they will be embedded in all kinds of machines, including washer-dryers, stoves, VCRs, and CD-players, all of which could be monitored and controlled by Bluetooth.
With the development of Infrared Financial Messaging (IrFM), a new “point and pay” wireless payment standard designed to accommodate 200-plus millions of IrDA-enabled devices already in the marketplace, it’s becoming apparent that IR technology will be playing a major role in the future of financial transactions. The numerous advantages IR technology has over RF for local transactions include:
Security
Because RF solutions (including Bluetooth and devices with wireless Ethernet connectivity) send radio waves in all directions, not point-to-point, they lack the inherent security offered by IR when implemented in transactions requiring confidentiality.
Ease of Use
Another problem with RF solutions is that competing 802.11 standards haven’t yet been formalized, whereas IR standards have been developed for a multitude of applications.
Market Presence
Much of the necessary hardware for short-range RF technologies doesn’t exist yet or hasn’t penetrated the market in substantial quantity. IR hardware and software is readily available.
Speed
The data transfer rate for IR solutions is five times higher than that of Bluetooth.
Power
IR uses five times less power than Bluetooth.
Cost
IR costs 10 times less than Bluetooth.
The future of wireless payment technologies will mean always having the right change for parking meters and vending machines, a quick and easy checkout experience, and easy access to receipts, coupons, and gift certificates. Paying for almost anything by pressing a button on your mobile phone or PDA will soon become a way of life. Because IR allows all types of devices, both costly and cheap, to share data, IR solutions suit both low-cost, high volume applications as well as high-end applications. Up until now the IrDA and Bluetooth payment solutions have been mere technology demos rather than mass market rollouts. Analysts predict that by the first quarter of 2002, local transaction technology should start rolling out to consumers.
Jourdan is a contributing writer at MedioCom.net. This well designed and easy to navigate site has quality and affordable feature stories, articles and images about timely and relevant topics. Custom content is also available. All products are available in English and Spanish and are easily accessed through MedioCom.net. Check it out today!
