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Cell phones to double as electronic wallets?

Visa USA is teaming up with Wells Fargo & Co. in an experiment aimed at transforming mobile telephones into electronic wallets.
/ Source: The Associated Press

Visa USA is teaming up with Wells Fargo & Co. in an experiment aimed at transforming mobile telephones into electronic wallets.

As part of a pilot program to be announced Wednesday, up to 50 Wells Fargo employees soon will begin paying for some products and services with specially equipped phones instead of credit and debit cards.

If those tests are successful, Wells Fargo then plans to ask 300 to 500 of its current customers to sample the mobile payment platform, which San Francisco-based Visa began building at the beginning of this year.

Wells Fargo’s customer tests won’t begin until autumn, meaning Visa’s mobile payment system won’t be ready for widespread usage until next year at the earliest.

Visa, which already runs the nation’s largest payment network, hasn’t set a specific timetable for taking the wraps off its mobile service.

Going mobile is a high priority for Visa and banks such as Wells Fargo that issue its cards because increasingly sophisticated wireless phones are opening up new opportunities to increase the frequency of revenue-generating electronic payments.

Several major banks, including Wells Fargo, Citibank, Wachovia Corp., also are developing new ways for customers to use their mobile phones to check account balances, transfer funds and pay bills, just like they have been able to do for years through personal computers.

Visa and its biggest rival, MasterCard Inc., have been laying the groundwork for mobile payments by enabling “contact-less” transactions that enable consumers to simply wave a card or key fob over a reader instead of swiping it through a machine.

Because the contact-less method doesn’t require a cardholder’s signature, it expedites the check-out process — an improvement that has encouraged more fast-food restaurants to accept credit and debit cards.

But it’s still a niche technology. Visa said just 32,000 of the roughly 5 million U.S. merchants that accept its cards currently can process contact-less or mobile payments.

What’s more, most consumers don’t have mobile phones equipped with the high-powered computer chip needed to make payments in Visa’s system.

But Visa and Wells Fargo officials are confident it’s only a matter of time before the technology becomes a staple of mobile phones.

“Mobile devices have become an integral part of everyday life, just as electronic payments have,” said Peter Ho, a product manager in Wells Fargos card services division.