Subway rides via cell phones-still a ways away

Wed Aug 5, 2009 3:09pm EDT
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By Laura Isensee

LOS ANGELES (Reuters) - Imagine waving your cell phone and being admitted through the turnstile of a subway station, or ordering and paying for a gift without once having to open your wallet or enter a credit-card number.

Yes, you can -- just not so much in the United States.

Mobile commerce has been touted as a major growth prospect for years, but the industry still faces several big hurdles before it takes off in the United States, executives and analysts say.

Consumers will likely keep paying the old-fashioned way with cash and credit cards, as mobile commerce has been hampered by cultural reticence, business model concerns and other issues, despite predictions that handsets will replace wallets.

"We're not too many years off where the restaurant will just send the bill to your smart device," eBay chief executive John Donahoe said at the recent Fortune Brainstorm: TECH conference in Pasadena, California.

Meanwhile, mobile commerce is taking hold in Asia where almost 500 million mobile transactions will occur in 2009, according to research firm Gartner, versus 34 million in North America.

By 2012, Gartner expects that transactions will grow to 2.4 billion in Asia and 221 million in North America -- a potential boon for the telecoms carriers that will host such commerce, including the likes of NTT Docomo, which pioneered contactless payments in Japan, or AT&T Inc, which enjoys an exclusive arrangement to market Apple's wildly popular iPhone.

In Korea, people can buy gifts on a handset and text friends to pick it up in the store. And in the Philippines, people can get money from families overseas faster and cheaper via text message than by using a bank transfer.   Continued...

<p>Riders make their way through turnstiles at the Times Square subway station after service resumed in New York early December 23, 2005. REUTERS/Keith Bedford</p>