Pay for McDonalds Big Mac with your cell phone

McDonalds is partnering with Japanese mobile phone operator NTT DoCoMo to offer electronic payments and special promotions for mobile users.

Using mobile phones to pay for goods is a massive growth sector of the economy. The joint venture between McDonalds and DoCoMo - worth 300 million yen - will see McDonalds Japan holding a 70% stake, with DoCoMo owning the rest. It is due to begin in July of this year. area for mobile phone companies who are looking for other profit streams

Japan is leading the way, where users can pay for food and train tickets via their handsets.

According to Julie Ask, an analyst with research firm Jupiter, the partnership demonstrates the need for carriers and merchants to have upfront agreements and co-operation .

"Otherwise it suffers from the chicken and egg problem. POS (Point of Sale) equipment is needed to interoperate with technology in the cell phones. Carriers and handset manufacturers need incentives to add cost into the cell phones. There has to be a network for it to be interesting to anyone," she said.

The deal could also provide invaluable information about customer behaviour,

It gives both McDonald's and DoCoMo the opportunity to track consumers and their eating habits. Cash is more likely to be used in small transactions. Electronic payments will allow user behaviour to be tracked and used for marketing purposes, Ask said.

As time goes on, more carriers are experimenting with electronic payments.

Mobile payments

In the UK, Chiltern Railways is to offer commuters the chance to buy tickets with their mobile phones.

Users buy their ticket on the internet and a barcode is delivered to their mobile phone. Chiltern is installing gates at Marylebone station which will scan the phones.

In Japan, DoCoMo set up a service which allows customers to use their handsets as a credit card.

By April 2006 there were around 3 million wallet phones in Japan using a pre-paid credit system where users could top up their account before using their phone to pay for something.

Would you like fries with that?