Replacing Plastic with PDAs

The proliferation of plastic cards for credit, debit and loyalty programs has fattened many a consumer's wallet. But consumers equipped with a PDA may be able to ultimately retire some of these cards if a new technology program jointly spearheaded by electronic payment solution provider VeriFone and handheld device computer maker Palm pans out.

Under the partnership, consumers with a PDA will be able to simply point their device at a specially designed VeriFone terminal at the point-of-sale (POS) in order to securely transmit credit card information via infrared light. That would enable consumers to dispense with ever having to swipe their credit cards through the payment terminal.

While any PDA can now transmit infrared light, VeriFone is piloting a terminal capable of receiving these signals. Palm and VeriFone jointly demonstrated this technology at the 2001 Consumer Electronics Show in Las Vegas in January.

Palm is developing mechanisms for transferring credit card information from a card to a PDA, which might include an Internet download or a special ATM (automatic teller machine). Initially, a PIN number would be used to verify the transfer of data, with more security slated for the future, the company says. The service will be free to consumers, and retailers will incur the same transaction fees they currently pay for credit card transactions.

"We are looking for ways that we can expand the Palm platform, so we are creating a way to have secure payments occur through the units on an open platform." says Stuart Taylor, director of emerging markets and business development for Santa Clara, Calif.-based VeriFone.

"We will start with credit purely because it is easiest to implement securely," says Taylor. "The next step will be to add debit and ATM card transactions. Our intent is to have all cards supported on this platform."

Within a year, the two firms plan to add information transfers for loyalty programs and electronic receipt captures to the platform's "point and pay" capabilities. For example, if an electronic receipt is displayed at the payment terminal, the infrared light will pull the receipt into the Palm, enabling consumers to store and access the data at their convenience.

"Imagine the time savings and simplification of receipt management and expense tracking when an electronic purchase confirmation gets loaded directly onto your handheld, while a merchant puts the purchase into bags," Doug Solomon, chief strategy officer at Palm, said in a statement. Santa Clara-based Palm was not available for further comment.

Eventually, the companies expect the PDA to be able to connect to the Internet through the VeriFone terminal, communicating email, expense reports and other content.

At press time, VeriFone and Palm were waiting to sign up the first round of retailers.