Students at Missouri Western State College in St. Joseph, Mo., don’t need to fumble for change in order to buy a Pepsi from local vending machines.
All they have to do is punch a number on their cell phone, and they'll be billed for the drink.
It's one of dozens of experiments underway nationwide that let consumers make "mobile payments," or m-commerce, on their cell phones and PDAs.
And so far it's a complete failure.
Ever since the novelty of the Pepsi machines wore off in October -- when they were first installed and 2,000 of the school's 5,000 students tested them -- only 50 students continue to maintain the prepaid accounts necessary to use the service. Everybody else still ponies up old fashioned U.S. currency to buy soft drinks at the school.
Rachel Jackman, the spokeswoman for Wirca, the company that installed the machines, said, it probably won't continue the service.
"Everybody's down on the idea of shopping on your cell phone," Jackman said. "We want a way to pay for things -- not to shop for things."
Telecom industry analysts, who once painted a rosy outlook for mobile payment schemes, have drastically downgraded their expectations.
Market research firm IDC originally predicted that shoppers in the United States would buy $108 million worth of goods over their cell phones by the end of this year. The firm has since rescinded those numbers and plans to put out a new report, which will forecast sales at around $500,000 by the end of 2002.
There's been a "change" in the way the industry defines m-commerce, said Keith Waryas, an analyst with IDC.
Before, it was assumed that m-commerce meant people would purchase goods they find on Amazon.com like books, clothing and consumer electronics over a mobile phone. The reality is "the stuff people are interested in buying on a mobile device tends to be mobile-related -- like ring tones and SMS (short messaging service) or short news stories," Waryas said.
These items, he added, are not the sort of things traditionally purchased from, say, a desktop computer.
The most obvious reasons shoppers aren't buying over their cell phones is because the phone's screens are small and their keypads are cumbersome to use for typing letters, Waryas said. If the future of e-commerce is wireless, then people will do their shopping over a laptop computer, which has a large screen and big keyboard, connected to a cellular or wireless "Wi-Fi" network, he said.
Security is a grave concern, too. No one wants to make a purchase wirelessly, if they think their credit card number will be stolen from thin air, said Simon Pugh, vice president of MasterCard International and co-president of the Mobile Payment Forum. Unlike a fixed-line system where information travels through wires, a wireless system operates over the air.
This past summer, retail store Best Buy was forced to remove its wireless scanners because customers' credit card numbers were exposed.
Another sore spot with customers is that wireless payment methods aren't available at all of their favorite stores. For example, they can buy sodas at Missouri Western State College and Sprint's headquarters in Kansas City, Mo., but nowhere else.
"We need to look at it on a global basis where you can go from one country to the next and buy things," Pugh said. "That is very important to us."
That's not to say retailers worldwide won't accept any wireless devices as means of payment.
One trend gaining momentum in the United States and abroad is the ability to scan wireless devices to pay for items like gas and food. This technology allows consumers the convenience of mobile payment schemes, but prevents them from having to punch in numbers on a small device. It also speeds up the rate of transactions, so merchants can take more orders.
While only "four customers a week" use a radio frequency tag on their key chains made by 2Scoot to order food at the Wake Forest Road Taco Bell in Raleigh, N.C., their transactions are faster than other customers', said Taco Bell assistant manager Anita Coley.
"Just 2Scoot and go," she said.
About 6 million people scan a "Speedpass," a small, black cylinder key chain with a wireless radio chip, to pay for gas at Exxon and Mobil stations nationwide.
Meanwhile, 440 McDonald's restaurants in the Chicago metropolitan area and Indiana let customers pay for food, either inside or through drive-thru, with the Speedpass.
The program has grown so popular that Stop & Shop Supermarkets plan to experiment with the service this winter, said Jeanne Miller, a spokeswoman for the Speedpass program. Timex also plans to implement the Speedpass chip in its wristwatches so people can scan their arms to buy goods, she said.
In Hollywood, Calif., Jan Frierson, owner of Le Bleu Zen jewelry store, still swipes customers' credit cards. But she then has them sign a Palm VIIx PDA to verify the purchase.
The handheld, powered by eProcessing Network, helps her take inventory of all purchases because it is connected with her home computer. It can even print out a receipt wirelessly.
"(My customers) think it's adorable," Frierson said.
Of course, they may not think so once the novelty wears off.
