Will Wallet Phones Be Big Outside of Japan?

Reuters writes that the market for using cell phones as mobile wallets may be slow to take off in the rest of Asia even as Japanese and South Korean mobile operators makeinroads and roll out handsets with embedded chips that allow electronic payments.

Ridhwan Bakar at Frost & Sullivan Asia Pacific said, "It would be safe to say mobile wallets would be available, if not common, in markets such as Singapore, Hong Kong, Taiwan and Australia before the next decade."

"Operators need to ensure that an initial acceptable (level of participation) is in place to avoid frustration by early adopters -- the conducive environment developed by NTT DoCoMo and other participants in the mobile wallet ecosystem is the key ingredient of its success in Japan," Bakar added. This will depend on "the level of security and degree of participation by retailers, banks, content providers and the public transport system," he noted.

Pyramid Research analyst Nick Holland commented, "Certainly, this technology has the ability to spread, but technology doesn't operate in a vacuum and there are a number of stakeholders who need convincing that this is worthwhile. The most important of these is the merchant who will need to upgrade his point-of-sale terminal with an RFID reader and will need to see demand from the consumer to pay using his cell phone -- it's a classic chicken and egg dilemma."

On why wallet phones have been succesful in Japan, Deutsche Securities analyst Tetsuro Tsusaka attributed it to the backing of Sumitomo Mitsui Card, the country's second-largest credit card firm and a leading Visa issuer. "It's going to depend on whether the financial industry decides to support it -- if there is no infrastructure in terms of compatible readers, then it won't take off," Tsusaka said.