Wireless Credit Cards: How Soon and How Pervasive?

Last week, Motorola (NYSE: MOT), Inc. (NYSE:MOT) announced plans to make a "virtual credit card" developed by Trintech (Nasdaq:TPPA) available on its lines of mobile phones. By pushing a button or issuing a voice command like "buy" or "pay," mobile users will be able to complete e-commerce transactions in seconds via their virtual cards.

The virtual credit card is a representation of a customer's regular credit card, without the full card number, that sits on the user's PC or mobile phone. The virtual card stores complete customer information, including name, address, card number and relevant shipping information.

When the virtual credit card is invoked, it automatically fills out all of the information for the shopper. The user only has to enter a PIN number to initiate the transaction.

Initially, the companies announced the virtualization of Mastercard on Motorola phones. Trintech also recently made a deal with Discover to create virtual versions of its cards, so they too will likely be available.

Luxury in PCs, Necessity in Mobile Phones

While virtual credit cards are largely a luxury on regular PCs -- which have easy-to-use keyboards to enter such information -- it could well be a necessity on mobile phones that have difficult-to-use keypads for entering alphanumerics. Without a virtual credit card, numerous wireless e-commerce transactions may never take place.

The Race

Motorola is now in a race against such competitors as Nokia and Ericsson to develop wireless telephones and other mobile devices. Just last month, Motorola teamed with Psion, the European palm computer firm, to jointly develop wireless devices.

Only weeks before that announcement, Motorola unveiled plans to align itself with America Online (AOL) and Nokia in a major investment in 3Com's Palm Computing, Inc. If all goes as planned, Motorola will license the Palm operating system for use in a line of wireless personal digital assistants (PDAs) that will offer Internet access.

Never an organization to pin all its hopes on one solution, Motorola had already announced its intentions to use Symbian technology for its joint venture with Psion, and to build wireless PDA devices around Psion's EPOC operating system.

Just how soon wireless e-commerce will happen depends on who is issuing the projections. Industry powerhouses Amazon.com and Virgin.com have already reported that they have each had sales from leading-edge customers using wireless devices.

Jupiter Communications forecasts that the number of users of browser-enabled mobile phones will skyrocket from just over one million worldwide in 1999 to 79.4 million in 2003. Jupiter also projects that the number of Internet-capable PDAs will more than double from 5.2 million in 1999 to 12 million by 2003.

Before these small-screen devices will be used for e-commerce, it will have to be easy to complete the transactions with appropriate security. The virtual credit card for wireless e-commerce could well be one of those seemingly small steps that, in hindsight, turns out to be far more significant than anyone imagines.