NTT DoCoMo, Japan's largest cellphone system operator, best known worldwide for pioneering the wireless Internet in 1999 with its hugely successful i-mode system, looks to have another big winner on its hands. Having recast the cellular handset as an electronic wallet--in effect a prepaid wireless cash card--it's getting ready to make it a full-fledged wireless credit card.

DoCoMo is working with major travel and banking organizations to extend the reach of its e-wallet service. Meanwhile, its two main Japanese rivals, KDDI Corp. and Vodafone K.K., are introducing competing products. (All three companies are based in Tokyo.)

The critical element in DoCoMo's Osaifu-Keitai, or mobile wallet, is a wireless smart card chip, FeliCa (from the English word "felicity"), which was developed by Sony Corp. and Royal Philips Electronics for close proximity, low-data-rate transactions. The wallet phones can be used to make electronic purchases at stores or vending machines equipped with FeliCa readers; can act as boarding passes on certain domestic air flights; and can authorize entry through corporate security doors--all with a wave of the handset [see photo, " Wireless Shopping"].

Already, a year after DoCoMo introduced its first e-wallet, the company has shipped some 6 million of the handsets. "By the end of March 2006 we forecast DoCoMo will have shipped around 10 million mobile wallets," says Shohei Sakaguchi, executive director of DoCoMo's multimedia service department. "And by the end of 2006 we believe the figure will reach 15 million." In addition, he says, competing carriers could ship 5 million more handsets, for a total of some 20 million mobile wallets by the end of next year.

Sony's FeliCa chip originated as the active element in its contactless smart cards, introduced in 1995. They dominate the market for such devices in Japan and are widely used in Asia as commuter passes and for making e-purchases. As of June, Sony had distributed 82 million such chips, including 53 million in Japan, 16 million in Hong Kong, 10 million in Singapore, and 1.5 million in China.

In January 2004, Sony and DoCoMo formed a joint venture to adapt the chip for mobile phones. Besides supplying DoCoMo with the chip, the venture is also shipping mobile FeliCa integrated circuits to KDDI and Vodafone, which launched their own wallet phones in September and October, respectively.

Users with FeliCa phones who have registered for the e-wallet service can load money onto the phone's chip in two ways. They can feed cash directly into special machines found in convenience stores and other locations, or they can do it by phone, keying in a personal identification number and transferring cash from a credit-card account.