NTT DoCoMo to add cashless payment function to phones

NTT DoCoMo Inc. will later this year begin selling mobile telephone handsets with integrated chips that enable them to double as electronic money and possibly commuter passes, according to a source close to the project.

The new handsets will incorporate Sony Corp.’s Felica contactless smart card technology and NTT DoCoMo is in the final stages of design for its implementation, according to the source. Unlike conventional smart cards, which require an electrical connection to be made with a reader, Felica requires the chip be brought within about 10 centimetres of a sensor and a transaction is completed by radio. This makes it easier to build the system into a diverse range of devices.

Initially the handsets will support the Edy electronic money system and allow users to pay for goods in supporting shops. Edy is operated by BitWallet Inc., a 25-member consortium headed by Sony Corp. and NTT DoCoMo. It started as a trial service in 1999 but went nationwide in the middle of last year when around 1,400 convenience stores in the AM/PM chain began accepting the cards.

Use of the e-money system is still limited, although more stores are expected to sign up for the system this year and Sony hopes to see 25,000 retailers accepting the card and 8.5 million cards in circulation by the end of March 2004.

Beyond Edy, each Felica chip has the capacity to hold 40 different applications and there is technically no reason why NTT DoCoMo cannot load additional applications onto its handsets, said the source.

Talks are also underway with East Japan Railway Co. about adding support for its Suica prepaid and commuter pass system to the cell phone service, according to the source. More than 6 million Felica cards loaded with the Suica application are in circulation in and around Tokyo and, subject to agreement between NTT DoCoMo and the railway company, handsets could also be used for rail travel.

Among the details still to be worked out is how to add credit to the Edy function and possibly other applications. There are no technical barriers to using NTT DoCoMo’s I-mode wireless Internet service to add credit to the card, said the source. However, such a system requires agreement from banks.

In addition to NTT DoCoMo, one of Japan’s other cellular carriers is in talks with Sony Corp. over licensing the Felica system for use in its mobile handsets, said the source. The identity of the carrier was not disclosed. However Japan’s number two cellular carrier, KDDI Corp., also holds a stake in Edy operator BitWallet.

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