Rapid Growth

DoCoMo announced in March that users of its Osaifu-Keitai compatible handsets had doubled to over 20 million in the previous 14 months -- astonishing growth for a service launched in July 2004.

An early application that grabbed attention was based on "Suica," the popular rechargeable contactless smart card introduced by rail lines. The downloadable Mobile Suica application turns handsets into electronic train passes. Both the Suica card and Osaifu-Keitai compatible phones incorporate Sony's FeliCa contactless IC-chip smart card.

Osaifu-Keitai's e-money applications also have gained popularity rapidly. DoCoMo subscribers can now use their phones for payments in countless convenience stores throughout Japan, as well as Tokyo's massive fleet of taxis. Besides no more fumbling with cash, purchase histories and balances can be checked in a glance, and adding more e-money is as easy as pushing a few buttons.

Osaifu-Keitai also facilitates e-promotions and memberships from which both businesses and customers benefit. DoCoMo's ToruCa information-capture service, for example, allows users to download flyers and discount coupons for a growing number of restaurants and stores.

In addition, Osaifu-Keitai enables phone-based credit-card services via DoCoMo's iD platform, which stores and processes credit-card data. The platform accepts not only DoCoMo's own DCMX credit card, but also those of other card issuers. Natsuno explains that subscriptions to the DCMX card service have grown steadily since its introduction last spring; as of April 18, 2.25 million people had become members.

New Way of Living

The effect of all this is huge. "Without ever opening up my billfold," says Natsuno, "I can use my phone to book and purchase an airline ticket, then hop into a taxi and head for the airport, download my e-boarding pass, pay for the cab at the airport, buy something to eat, drink and read, as well as book a hotel room while waiting for the flight, and then take a cab to the hotel after I land."

Supermarket chains are using Osaifu-Keitai to introduce discount and point systems. Now, supermarkets can analyze the purchasing behavior of customers to create more effective loyalty programs. Since everything is handled electronically, companies are able to dispense with paper advertising, allowing them to save money while conserving natural resources.

Revolution for Service Providers

Osaifu-Keitai is a win-win model for customers and retailers/service providers because what's good for the former is good for the latter. Japan's convenience stores, for example, have jumped at Osaifu-Keitai because its ease of use leads to increased consumer spending. Airlines love how the system facilitates consumer relationship management (CRM) and related loyalty schemes, while passengers happily earn mileage and discounts when they book and pay for flights with their DoCoMo phones.

McDonald's Japan made news recently by announcing it will offer phone-based payments (iD) and mobile information services (ToruCa) from October. In an industry where service models are based on speed and simplicity, Osaifu-Keitai enables McDonald's to shave valuable seconds off each purchase, because the customer simply waves the phone over a reader. McDonald's will also build loyalty programs through ToruCa-based memberships and discounts.

"It's not enough to just develop the technology. The business model is equally important," Natsuno says.

But technology, especially security, is vital to the success of any service used for financial transactions. Losing an Osaifu-Keitai compatible phone is much like losing one's credit card, so DoCoMo operates a help center that customers can contact 24/7 to have their lost phone disabled remotely. Not only Osaifu-Keitai functions, but all personal data and e-mail, as well as address book, can be secured over PC or through dialing in from a pre-registered phone number.

Secure Future

Turning to the future, Natsuno expects DoCoMo subscribers who have Osaifu-Keitai compatible handsets to grow rapidly for the next several years. Moreover, with the emergence of mobile-wallet services outside of Japan, DoCoMo's i-mode partners around the world are showing strong interest in Osaifu-Keitai technology and business models.

Although it's still too early to predict the future scale of services both in Japan and overseas, the trend in Japan is crystal clear. "The mobile wallet concept, as well as the infrastructure to support it, is becoming a permanent part of our lives," Natsuno says.