Get ready to dial e-money

The next 12 months could see mobile telecoms operators such as Orange and Vodafone become virtual banks, following an EC...

The next 12 months could see mobile telecoms operators such as Orange and Vodafone become virtual banks, following an EC directive.

Meanwhile, the percentage of Air Miles earned on the ground and spent off the ground is growing rapidly.

All this indicates that despite the slow progress of 3G mobile telecoms, the real-world economy is moving towards the day when cash can take a pure digital form. The age of e-money is upon us.

Once telecoms firms - or any other industry that supplies a digital link to the mass market - can hold and transfer a digital medium of exchange, they can begin to levy micropayments for online services and transactions.

This brings the end of the "free" Internet service closer. More accurately, what is free today is likely to stay free: the low-bandwidth, HTML-based "Internet MkI", which few people have discovered how to exploit as a way of creating new value. Internet MkII meanwhile - broadband, visual and highly interactive - will see the real birth of an online consumer economy.

This birth of global e-money will create huge security and digital certification challenges for firms at every level of the economy.

But in the short term it raises a question mark over the vertical alliances that are forming to meet the challenge of creating an online mass consumer market.

Comms giant NTL has been blazing a trail of alliances in the past few weeks. We could see a conglomerate in which AOL/Time Warner provides content, NTL provides fixed broadband and broadcast infrastructure, and Orange supplies the wireless telecoms. Alliances like these are in the offing across the comms and content sectors, aimed at providing a single point of sale for online commodities.

But if the mobile telcos succeed in becoming virtual banks they may have no need for strategic alliances. After all, money was originally developed so that consumers would not have to live and die within a closed local economy.

Above all, the near-future arrival of e-money means all corporations should be taking their e-money strategy off the "blue sky" agenda and putting it into the medium-term plan.

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