Credit Card Goes Wireless with High-tech Mobile Phones

A 35-year-old K is a self-professed early adopter who wants to use whatever new product comes out. He now considers getting a new mobile phone. He is so eager to use a mobile phone for credit transactions as shown in TV ads. He even read a newspaper article a few days ago that a domestic mobile phone manufacturer introduced the world`s first integrated circuit (IC) chip-embedded handset for wireless transactions.

Come to think of it, he has always felt uncomfortable about his fat wallet filled with several credit cards. It is not good for his style, either.

˝If I can use the mobile phone for credit transactions I might not have to carry a wallet. Given there are few people using the high-tech mobile phone, however, there must be some problem with the technology.˝ K began to operate his radar to collect information.

▽Not-So-Special from Looks = When he visited a mobile phone sales outlet to get a glance at the wireless transaction-enabled handset, he only found a usual-looking mobile phone.

The only difference he could notice was that there is a nail-sized groove on the area where a battery is attached. That is the place for an IC chip, a clerk in the store explained. When the chip and then the battery are installed, there is no difference at all. For wireless transactions, however, the integrated circuit chip-installed phone is a must.

The price is a little higher than other regular phones. Mobile phone companies have so far introduced one or two of the high-tech models respectively, the clerk said, but they plan to boost the number to about 10 within this year.

When you fill in an application for wireless transaction service with a credit card company or a wireless carrier after purchasing the handset, they will insert an IC chip. It is just like you get a credit card after filling in an application. With the chip inserted, you can use the handset for credit transactions any time.

▽Where to Use = Convenient it may be, the handset is useless without stores accepting the mobile phone payment. It is different now, but some 10 years ago there were quite a few stores that refused to accept credit cards. K was not sure thinking about how it used to be. `I might find it hard to find stores accepting the mobile phone payment for years to come.`

The relationship between a handset and a reader for mobile phone wireless transactions is like that between a string and a needle. For this reason, wireless carriers are also working hard for penetration of readers.

SK Telecom and KTF are narrowing down to reach an agreement on a common standard for mobile phone transaction systems. The two used to stick to their own but have recently realized the need to find a common ground for growth of the market.

SK Telecom plans to set up 470,000 card readers throughout stores by the yearend. KTF, on its part, is set to provide some 100,000 readers and further release in the market transaction-enabled handsets in the second half of this year.

`Given wireless carriers roll out TV ads aggressively, they will not likely slow at increasing member stores,` K thinks to himself.

▽ How safe is it? = Only one problem remains. Recent incidents around the forged ATM card occurred to him. Is it safe to pay with the cellular phone? What if I lose my cellular phone?"

The mobile communication companies say in harmony that the IC chips are more secured than other credit cards or debit cards based on the magnetic. Generally the cards based on the IC chips go with three-step security procedures: entering password, confirmation, encoding.

He thinks that the outstanding difference is that he should enter his password to pay, instead of just giving his card to the clerks. Unlike general credit cards, one should enter the password to use the cellular phone to pay. Even when one loses one`s cellular phone, he or she can be somewhat relieved if the password is not exposed. Of course it stops upon the report of the loss like other credit cards.

After listening to all the explanation, K should make a decision whether to buy it or not. K decided to use his cellular phone purchased last year. However he decided to buy a cellular phone with wireless paying function when he buys a new cellular phone replacing his old one. He thinks that it would be very convenient to use cellular phone to pay for buses, subways, bending machines and highway in addition to the credit card function.

smhong@donga.com