The wallet goes virtual

Mobile applications are turning cell phones into tools for on-the-go commerce

Those concert ticket stubs stowed away for posterity might soon be a thing of the past.

That's because at the Recher Theater in Towson and other venues, a smart phone — not a paper ticket — will soon be all you need to get through the doors.

The cell phone is evolving from a communication device into a virtual wallet. The rise of smart phones, with larger screens and constant access to the Internet, has spawned more applications that can change consumer behavior. A smart phone now can be a ticket to an event, a credit card reader, a banking tool, a barcode scanner, and a coupon.

The technology is part of mobile commerce's booming growth — with shopping via phone already a multibillion-dollar industry.

At the Recher, a cutting-edge mobile ticketing system will debut later this month that delivers tickets electronically, complete with oversized barcodes, to smart phone screens. Then the phone screen gets scanned at the music venue's front door. The Recher partnered with two Baltimore technology firms, Mission Media near the Inner Harbor and Barcoding Inc. in Canton, which developed the system.

"We want to make it easy for the customer… and get people printing out less paper," said Joe Loverde, principal at Mission Media, whose MissionTix subsidiary worked on the system. He added: "The younger crowd is more likely to have a smart phone."

Mobile commerce is expanding at a rapid clip.

In the U.S., mobile online shopping rose from an estimated $396 million in 2008 to $1.2 billion last year — a threefold increase, according to ABI Research, a New York-based market analysis company. And the phenomenon is stretching around the globe. Japan had a $10 billion market in mobile online shopping last year, ABI reported.

That's because smart phones are capable of so much more than phone calls and even simple Web-browsing. They can be used for online transactions, and they can allow consumers to take advantage of marketing offers.

Some Baltimore-area restaurants, for instance, offer specials and deals through MobileCoupons.com. A consumer downloads the coupon to a cell phone and then shows it to the restaurant or store to redeem it.

In March, Target Inc. introduced mobile coupons using barcodes sent to cell phones for customers to scan at the checkout counter in their stores. The company is believed to be the first mass merchant to deploy scannable mobile coupons, but more major retailers will likely follow its lead.

The cell phone is "getting close to becoming a wallet," said Neil Strother, an analyst with ABI Research. He said consumers can expect to live in a "hybrid world" in the next three years, where traditional banks, telecommunications carriers and technology companies develop competing mobile applications that make it easier for consumers to use their phones for commerce.

"People are becoming much more familiar with using the phone as a commerce tool, and I think that'll continue to resonate," Strother said. "But getting to the point where it's the only way to buy things, we're not quite there yet."

While advancing mobile and Internet technologies push companies to evolve, the outcome could mean better prices and convenience for consumers and small business owners, according to Nick Holland, senior analyst for mobile commerce at the Yankee Group in Boston.

Credit card and electronic payment companies are being forced to adapt, he said, as merchants are finding they can set up direct-billing relationships with customers via mobile phone accounts.

A new startup called Square, launched by a co-founder of Twitter, turns an iPhone into a credit card scanner with a free plug-in device. The simple system enables small business owners to avoid costly fees tied to traditional methods of accepting credit card payments.

The result: The next time you buy something from a street vendor, your credit card could be scanned by the merchant's smart phone.

PayPal, which revolutionized online payments for consumers, also is moving swiftly into the mobile arena. Its owner, eBay Inc., had $600 million in sales through mobile phone applications last year. This year, the online auction site expects to more than double mobile sales to $1.5 billion. And in March, PayPal announced it would use technology that allows iPhone users to exchange money by "bumping" their devices together.

Some banks have leapt into the mobile banking space, offering consumers secure ways to manage their money and even deposit checks on the go. USAA, a financial institution serving members of the military and their families, offers an iPhone app that allows its customers to snap a photo of a check they wish to deposit — and the money shows up in the account.

Bank of America, the largest bank in the country, has a popular, free smart phone app that enables customers to check balances, pay bills, transfer funds and find nearby ATMs.