Japan blends credit cards and mobiles

Japan's largest mobile operator, NTT DoCoMo, has launched its own credit card brand, iD, which will allow customers to make payments using their handsets.

A number of handsets will offer the credit card functionality, which will see some DoCoMo customers swipe their phones over a dedicated reader in shops and have payment deducted from a credit card linked to the phone.

Owners of handsets equipped with 'o-saifu-keitai' (mobile wallet) functionality will be able to make small purchases 'contactlessly', while larger payments will require a password as authorisation after the phone has been placed on the reader.

In the event of theft, the phone can be instantly locked.

Card issuers will be able to authorise user applications to use iD and DoCoMo itself will act as a credit card provider from the first half of fiscal 2006.

DoCoMo has already made a foray into the world of blending cash and phones. Its i-mode FeliCa service lets users turn their mobiles into wallets, by making micropayments with money previously charged to the phone.

Graham Titterington, principal analyst at Ovum, said the UK is unlikely to see mobile credit cards in the short term.

He said: "I think if anyone tried launching in the UK today it would be a bit ahead of the curve. Most people are fed up with the plastic in their wallets and the bulk – the inherent demand is there but the [credit card] vendors are reluctant... A [credit card] is not just a method of payment, it's about customer loyalty."

Titterington added that UK consumers will need to have their fears over the security of the device calmed before any adoption could be widespread.