Cell Phones as a High-Tech Wallet

According to a report by the Mercury News, you could make payments by cell phone in the near future. For several years we've been hearing that, pretty soon, we won't need cash or debit cards when buying groceries, clothing, gasoline or other items at local merchants. Instead, you will be able to use your cell phones as a 21st-century form of high-tech wallet.

Now it can be found in the town of La Junta, Colo., near Colorado Springs. There, Palo Alto startup Bling Nation has launched a pilot program that lets people make purchases "with the tap of a mobile phone."

Bling Nation, which was launched in 2007 by Argentine immigrant Wences Casares, last week landed first-round funding of $8 million led by Lightspeed Venture Partners with participation from earlier investors Meck and CampVentures.

Similar initiatives launched in major metropolitan areas have proved problematic, in part because of entrenched economic interests to telecom giants and consumer habits, Casares and Lightspeed partner Eric O'Brien said. By starting out in relatively isolated communities where people tend to shop near where they live and work, they say, Bling Nation is building a case for the advantages of making payments without using cash or cards.

Bling launched its "Redi Pay Bling" service in La Junta in collaboration with The State Bank, a Colorado-based institution, and several local merchants. The system, Casares says, helps cut transactional costs, which improves savings for consumers and enhances business for the bank and merchants.

It also enables product and service promotions not available with the credit card system. Merchants can advertise specials over the phone and consumers can earn "points" for using the phone, much as one adds up airline "miles" on a credit card.

The advantages, Casares say, come in the cell phone's function as minicomputer. For example, the cell phone, unlike the debit card, instantly reports the transaction and updates your checking balance, much as an ATM does, reported the Mercury News.

(July 3, 2009)

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