While Europe currently lags behind the US in electronic commerce, the widespread use of mobile technology and smartcards will help Europe catch up or even surpass the US, according to analysts here.
The large number of mobile phone users combined with emerging technologies, including WAP (wireless application protocol) and Bluetooth, means that at least 40 percent of consumer e-commerce transactions outside of North America will take place from mobile devices by 2004, according to a new research paper prepared by analysts with Gartner Group. The analysts presented their findings at a press briefing as part of Gartner's European Symposium/ITxpo '99, being held here through Thursday.
Bluetooth, combined with smartcard technology, may also mean that consumers will use smartcard chips in their mobile phones to pay for ordinary, low-priced purchases such as drinks from vending machines or parking tolls, said Nigel Deighton, research director for Gartner in France.
Bluetooth is a technology, that, when released, will allow devices to communicate with each other via low-powered radio transmissions.
In its first release, due out next year, Bluetooth will only connect one device with another -- it's only point to point. Eventually, according to Deighton, Bluetooth will allow many devices to connect with each other. That means that a person's mobile phone can connect without cables with a personal digital assistant or handheld computer or other electronic devices. The GSM (global system for mobile communication) essentially becomes a personal communication server, connecting all various devices through one GSM subscription, Deighton said.
More than 1,000 companies belong to the industry group supporting Bluetooth, and if even 100 of those companies develop products using the technology it will be unstoppable, Deighton said.
With the use of Bluetooth, a consumer could purchase something like a drink from a vending machine without ever taking out a card or cash. Using Bluetooth, a small charge could be deducted from a smartcard included in the phone. Bluetooth would send signals from the machine to the smartcard, deducting the cost from the user's account.
The technology is far away from being able to complete such transactions, however. Since Bluetooth will only initially be able to communicate with one device, such uses are not possible, Deighton said. Also, when the technology does allow for point to multi-point transmissions, the danger that a user's devices are open to attack from passers-by is a real threat. Hackers could, for instance, create applications that would withdraw money from a user's smartcard and place it in their accounts without the user knowing, since physical contact isn't necessary. The danger of devices infecting each other with viruses is also a real one according to Deighton.
Instead of smartcards, purchases could also be charged to a user's mobile phone bill. One inherent limit to this kind of e-commerce will also be transaction amount, Deighton said. "No mobile carrier would allow you to put a car on your mobile phone bill," Deighton said.
Banks and mobile carriers will work together to create payment systems for such commerce, Deighton said.