"Will That Be Cash, Charge -- or Palm?"


Picture this: Your business colleague is fumbling to get her corporate credit card out to pay for lunch. But you beat her to the check by beaming your payment with infrared technology to the cash register, using your handheld Palm computer. In the time it would take your companion to get the waiter's attention, you've signed the bill electronically, and the amount has been entered into an expense-tracking program in your handheld device, tip included. The next day, you sync your Palm with your desktop PC, and it updates your expense-report records. And hey, look, you qualify for a frequent-diner discount on your next meal.

Good-bye fat wallets and bulging purses? Could be, if the Palm eWallet catches on with consumers the way its creators envision. The technology is closer than you might think. A beta with participants that include Palm, Visa, European credit-card-payment company Ingenico, and U.S. payment-provider Verifone is already being tested by 100 Spanish Palm users who frequent 10 Barcelona restaurants. Next up, a test run with 1,000 users at 10 hotels in California. If all goes well, Palm plans to launch the program nationally among hotel, airline, restaurant, and car-rental companies in the third or fourth quarter. Palm already is exploring the possibility of a wider rollout that includes Europe.

SMART-CARD FUNCTIONALITY. It's an intriguing alternative to the ongoing search for a universal "smart card" technology that would combine identification, cash, health information, and nearly anything else that can be encoded on a magnetic strip in one handy unit. Putting smart-card functionality into the Palm, which is replacing the Franklin Planner as the 21st century organizational ball and chain, would go one step further and eliminate the need for a wallet or purse altogether.

The technology demonstrates just how quickly new uses are emerging from what essentially began as an electronic way to keep track of appointments and phone numbers. Yet there are some sticky privacy and security issues, admits Palm Director of Corporate Development Jean-Marc Sarat. Palm and its partners still need to figure out a way to ensure that the person beaming the payment is actually the rightful owner of that Palm. Users, merchants, and government officials will have to be confident that the information can't easily be duplicated or stolen, and that the encryption is bulletproof.

But the technology for beaming cash is fairly mature thanks to such innovations as debit cards to pay for groceries and clothing and gasoline wands that automatically pay at the pump. And otherwise, Palms are no better or worse than credit cards in terms of security. Possible ways of ramping up their safety include incorporating biometric authentication, such as facial recognition or fingerprints, or requiring a pin code to complete a transaction.

LOTS OF POSSIBILITIES. As the digital revolution overtakes the old analog world, eWallet technology is initially being targeted to mobile business consumers, whose digital-communication needs are greater. And by virtue of Palm ownership, these consumers are likely to be more technologically savvy and thus more comfortable with beaming their transactions.

Palm has big plans for the eWallet, beyond using it as a nimble means of payment. In addition to paying hotel checks with their Palm, for example, the customer might also download discounts to area restaurants and merchants, a map of the vicinity with major attractions clearly marked, and even personalized service information based on past preferences, Sarat says. Merchants could tailor their deals to frequent fliers or other special users automatically.

The debit-card functions will spread quickly once the Spain and California beta programs are complete, Sarat predicts. Users will download the eWallet software from the Palm site. New units later this year likely will come with the software already installed. To activate it, users can visit a participating bank, use an ATM machine with infrared capability, or sign up online. In addition, some merchants might opt to allow activation in stores.

PLAYING CATCH-UP. And as it has done with its Palm operating system, the company isn't limiting the technology to its own devices. The expectation is that it will expand into a whole host of wireless devices that communicate with next-generation wireless standard Bluetooth and other emerging communication technologies.

There likely will be no shortage of new customers. Sales of handhelds hit 3.7 million units in 2000, 91% with the Palm OS, according to PC Data Inc. That's quite a bit less than the 9 million personal computers sold last year, but handhelds clearly are gaining ground. In December, while PC sales languished at 500,000 units, handheld computers flew off the shelves to the tune of nearly 1 million units. That's a whole lot of people who may soon be beaming their tips to the waiter. By Jeff Green in Detroit


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