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Philips, Visa team on wireless pay-card

Development is under way on a smart card, powered by short-range wireless technology, that is designed to let shoppers pay by just waving the card in front of a sensor.

An upcoming smart card aims to let shoppers pay everywhere they want to pay--without opening their wallets.

Royal Philips Electronics and Visa International announced Wednesday an alliance to promote and develop a contactless chip technology, a short-range wireless technology that would allow people to pay for goods by waving a smart card in front of a sensor. Transactions could take place anytime, anywhere and through any device, in what Karsten Ottenberg, senior vice president at Philips Semiconductors, a Philips unit, referred to as "universal commerce."

"We want to expand and promote the idea of universal commerce, to reach retail and online payments, and we want to work on a business model to bring partners in on this," Ottenberg said. Universal commerce is a part of Philips' push for the "Connected Home," in which televisions, PCs and other home electronics devices are connected and communicate with each other using wireless and Internet technologies.

The fruit of the joint labor between the consumer electronics company and the credit card giant may appear as soon as next year, Ottenberg said. Examples of contactless chip payments are already being seen in parts of Europe and North America, he noted.

The alliance joins other efforts by retail, payment and technology companies to use wireless technologies in areas such as inventory tracking, billing and communications to improve business efficiency in everyday life.

Radio-frequency identification (RFID) has been the wireless technology most in the public eye, as its use in inventory tracking has raised privacy concerns.

The Philips and Visa partnership will be working on wireless technology with a shorter range than RFID--four inches rather than five feet. The technology, called Mifare, has been developed mostly by Philips until now.

Mifare is a contactless smart-card technology meant to facilitate secure payment transactions. (Philips has shipped more than 300 million Mifare chips since the mid-1990s, according to Ottenberg.) It is compatible with "Near Field Communication"--a short-range radio technology co-developed by Philips with Sony--which allows devices such as mobile phones, digital cameras, handhelds and personal computers to swap data.

Visa brings its payment expertise and its influence to the partnership.

The companies plan to look at a number of applications for the technology and to seek partners in the manufacturing and services industries to develop business and technical models.