Using a phone instead of a cheque or credit card has been postulated for years, but Australia is set to get its first large-scale mobile commerce platform when Telstra begins trialling the technology in 2008.
Speaking at this year's Australian Smart Cards Summit in Sydney Telstra's director of payments and trading solutions, Anthony de Jong, said we will begin to see live working trials early next year and by 2009 we should start to see it scale up.
"They will be Telstra trials and we have a strategy to develop near field mobile payments," de Jong said.
One method of enabling mobile phones to facilitate commerce is with Near Field Communication (NFC) technology, which is a short-range wireless signal standard that can transmit data to a "reader" at the merchant location, eliminating the need for a credit or debit card.
"Mobile devices are becoming all pervasive and there is no doubt it will become a payment option," de Jong said. "There is the opportunity to converge phones with existing payment systems and we are well positioned to deliver the possibilities."
In between the flashy Telstra marketing videos, de Jong expressed confidence in the potential for mobile commerce to eliminate cash and increase aisle speed for merchants, but was coy about which NFC-enabled handsets will be used, saying the first one will be revealed "when you give me some standards".
Also unclear is what back-end technology Telstra will use to power its mobile commerce platform, with de Jong saying there is an "exposure draft" of potential sourcing decisions.
"350 million new phone subscribers will be added globally this year [and] that's a very big number of consumers," he said. "What's so special about a mobile phone? When a phone is lost it takes 27 minutes on average to report it and with cards it takes 24 hours [and] the over-the-air capabilities can deal with any post-issuance problem."
de Jong said "contactless" cards have been around for about four years and is dominated by PayPass, but with 58 percent expected to be able to accept contactless payments in the next few years, mobile commerce becomes a question of deployment and the associated business model.
Locally, mobile penetration is expected to reach 23 million handsets, according to Telstra, and the only area of decline is fixed-to-fixed calls.
Internationally, de Jong said mobile commerce has taken off in Japan where it is used for transport payments, including flights, where as many as 15,000 people a day use the service for plane tickets.
"Using a phone to hold ticketing information is very real and will come to us in Australia," he said. "The next thing is being able to accept loyalty points."
Both banks and merchants will need to prepare for the proposed mobile commerce revolution, including how the money will be collected from consumers.
"Telcos need to stick to their knitting and we shouldn't pretend to be a bank but we are the enabler," de Jong said. "The merchants need to put in place infrastructure that will service the contactless environments and the telcos need to put in infrastructure around over-the air-provisioning."
An emerging model is the uSIM model which emphasises SIM privacy over handset privacy and supports over-the-air management.
Rather than the phone company accepting payments, de Jong believes the existing payment gateway providers going mobile is a better option.