Your Wireless Phone Will Replace Your Wallet

Perhaps in Europe, But Americans are still legitimately worried about security

Talk to people who live abroad or who travel frequently, and youll hear the same thing: Americans are wimpy when it comes to mobile wireless commerce.

"Security and privacy issues around mobile wallets are such a U.S-focus thing," said Allan Carter, Captaris director of mobile wireless marketing. "Were such a paranoid culture."

The stats bear out the feeling. About 33 percent of all Americans who own wireless devices say theyre too worried about the security of credit card numbers and personal information to use their cell phones as mobile wallets, a March Jupiter Media Metrix study concluded.

In Americans defense, Europe and other areas have more access to global system for mobile communication (GSM) technology, which allows smart chips, or Subscriber Identity Module cards, to be inserted into wireless devices. Personal info is stored on the SIM card rather than a server, reducing the chance that transactions will be waylaid in cyberspace.

Gartner Dataquest estimates that by 2004, more than 80 percent of cell phones will have chip technology. But until GSM becomes more common in the U.S., the solution is to use carriers as billing services, analysts say. A mobile transaction would access the customers information stored on the phone carriers database, eliminating the need to keep credit card numbers on a cell phone.

Other solutions sound like something out of a James Bond movie. Companies are looking at biometric security measures, including phones that recognize users fingerprints or scan their retina.

Another more viable solution is Wireless Transport Layer Security encryption software, which lets a cell phone user access his or her data from the users own computer, where data can be stored behind a firewall.

MasterCard International is relying on chip technology and personal identification numbers (PINs) to provide privacy during mobile transactions. The credit card company works with standards groups and publishes security specifications, employing labs to do the testing.

According to Simon Pugh, MasterCards vice president of infrastructure and standards for mobile commerce, MasterCard customers are comfortable with PINs, and thats important because "customer perception of security is the tricky problem to solve."

Seamus McAteer, a Jupiter research fellow, said it will be three or four years before the mobile-wallet concept really catches on.

And although perception is a key obstacle to adoption, McAteer said mobile security is "not that big a pressing need. Weve been watching this glacier a long time."