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The Risks and Opportunities in a Mobile Commerce Economy

Mobile commerce could represent the biggest behavior change ever experienced in commerce when payments, real-time banking and targeted consumer marketing all become available via cell phones, BlackBerry®, iPod® and other wireless, hand-held devices. With billions of these types of devices in use worldwide, it becomes plain to see why First Data is excited about the possibilities.

Imagine for a minute that you are one of the 370,000 daily riders of the Bay Area Rapid Transit (BART) system that crisscrosses three counties in the San Francisco region. Only today, instead of swiping your monthly BART EZ-Rider Pass Card or purchasing another paper ticket, you simply pull out a special Sprint® cell phone and wave it at the turnstile at your local station. On the way to your train, you notice a billboard advertising the latest sandwiches at Jack-in-the-Box® restaurants. Just tap your phone to the poster and download directions to the nearest location.

While riding into work under the San Francisco Bay, it’s easy to check your BART EZ-Rider account balance directly on the cell phone and, because it is getting low, transfer funds from your checking account to increase your balance. Then, switch over to view your Jack-in-the Box Jack Cash™ account balance (courtesy of a birthday gift card from Mom) and there you discover a sufficient balance remains to take a few co-workers to lunch.

On your way into the office, stop and get a coffee—again, simply by tapping your phone to the terminal you are now one drink closer to that free latt). At lunch, you once again pull out your cell phone and touch it to the payment terminal. The cost of that lunch for you and your co-workers is deducted directly from the gift card balance from Mom, less a coupon you received overnight on your phone, and you are all on your way. Since you left the house this morning, you still haven’t had to reach for your wallet.

The reason I love to give this example of how mobile commerce might work in the future is that it actually just happened and quite successfully so. Through a partnership with several companies, including First Data, 230 regular BART riders were, in fact, issued one of those special Sprint phones for a four-month trial. Using Near Field Communication (NFC) technology and secure provisioning, those phones became the payment method not just at BART stations, but Jack-in-the-Box restaurants as well. Multiple existing account types from multiple sources were all successfully working on a single device.

This one experiment taught us several things and served as proof-of-concept for a variety of mobile commerce services. But it only scratched the surface of a deep and almost unlimited sea of opportunity (and potential roadblocks) for merchants, for financial institutions, for advertising and marketing agencies, for wireless carriers, for technology developers and most importantly for consumers.

Learn more about mobile commerce by reading our series of white papers linked below.