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A Thing

Put Your Wallet Away, but Keep That Cell Phone Handy

Reading magazines while standing in a checkout line waiting for a clerk to ring up purchases and complete the transaction may soon be an outdated activity. Contactless payments are closer to becoming a reality in the United States, thanks to cell phones and computers attached to shopping carts, and to partnerships between wireless and hardware providers and the card associations.

In Massachusetts, Illinois and the Dallas/Fort Worth area, programs using wireless technologies are allowing shoppers with hand-held devices to scan chip-embedded items on grocery store shelves; selections are tracked and recorded via wireless communication and viewed on a screen attached to the cart. Shoppers tally and pay for their own purchases; a variety of payment methods are being tested. The Shopping Buddy pilot in several Stop & Shop locations in Massachusetts uses Pay By Touch biometric devices to access customer account information.

Nokia, Visa International and overseas wireless carriers are in the midst of "proximity payments" pilot programs in several countries, including South Korea, Japan and Finland. Several million people will take part in the South Korean trial in 2004; so far, 89% of the early users said they would use the system again, Visa said.

The systems use wireless phones outfitted with radio-frequency identification (RFID) capabilities to read chip-embedded items on store shelves, and then access credit or debit accounts to complete the transactions. Visa International hopes to incorporate wireless technologies, including RFID, infrared and a new standard called near-field communication (NFC) in programs for contactless card payments, or "U-payment," in the United States.

At the International Consumer Electronics Show in January 2004, Visa and partner Philips Semiconductor demonstrated how mobile devices use NFC for very short-range (distances of up to three-inches) communications. NFC's big proponents, Philips and Sony, see it as a way to establish communications between many electronic devices-cameras, PDAs, computers, TVs-so consumers can buy and transmit services, including music, between them.

According to a spokesperson, Visa considers mobile phones to be its biggest target market in contactless payments; the widespread use of both credit cards and cell phones makes them natural partners.

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