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By LuAnn LaSalle
The Canadian Press

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MONTREAL - Mobile phones are going to become more like digital wallets, allowing consumers to send and receive money and even make some purchases like coffee and lunch.

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THE ASSOCIATED PRESS PHOTO

New tricks: A staff member, centre, gestures to one of her customers waiting to buy the new 3GS iPhone at an Apple store in London recently.

The goal is to integrate consumers' wallets into their phones, said Aran Hamilton of Toronto-based Enstream which recently launched a mobile payment service called Zoompass for consumer testing and feedback.

Zoompass works on about 45 mobile phone models, including some lower-end phones.

"We're not just focusing on the people who have the smartphones," Hamilton said Thursday.

Enstream is a joint venture owned by the three major Canadian wireless carriers, Bell Mobility, Rogers Communications Inc. and Telus Corp.

With the widespread use of cellphones, the ability to use it for payments and money transfers is seen as yet another function that helps make the device seem almost indispensable for consumers.

Down the road, people will be able to use Zoompass to pay for public transportation, Hamilton said, adding they can use it now to buy some brands of coffee.

"The whole thing will be done on your mobile as opposed to having to pull out cash or change."

With the Zoompass software, consumers can link their personal bank account or credit card to load and transfer money.

It costs 50 cents to send money from a Zoompass account, but there's a 3.5 per cent fee to send money from a credit card. It's free to receive money from someone.

Even though consumers don't have to contact their banks if they're using Zoompass, it's not yet clear if there will be banking fees associated with its use.

"We have very strong dialogues going on with the banks to find ways to integrate our services into what they offer," Hamilton said.

But he argues that it's less expensive to use Zoompass than it is to send money via email, or to pay fees at an automated bank teller that isn't associated with a user's bank.

To purchase goods, the technology isn't yet at the point where consumers will be tapping their phones on a wireless terminal to pay for their purchases, he said.

To pay for a purchase with Zoompass, consumers need to use a prepaid MasterCard that they will tap on a terminal.

The mobile payment industry isn't expected to be considered mainstream until 2012, when its use will be more prevalent in the Asia-Pacific region and Japan, said U.S.-based technology research company Gartner Inc.

Gartner has said security concerns and undefined banking regulations remain challenges for mobile payments.

Technology analyst Jack Gold said he still doesn't believe it's convenient enough for consumers.

"I don't see the business case yet for making mobile payments in North America popular," said Gold of J. Gold Associates in Northborough, Mass.

It's another way for wireless carriers to make money from consumers, said Gold, who has been watching the evolution of mobile payments for the last five years.

"In the short term, the next three to five years, I don't think is going to be anywhere near as prevalent as just plain credit card and debit card use."

Hamilton, however, sees it differently.

"It will take a few years to fully penetrate in, but down the road we will definitely be able to integrate that part of our wallet into our phone."