The cheque's in the phone

By BBC News Online internet reporter Mark Ward

How shall I pay thee? Let me count the ways.

Lord knows it is tricky enough choosing a mobile phone, what with the huge range of handsets, pricing options and networks out there.

As mobile phones mutate into something more akin to an electronic wallet, it is getting just as hard to pick a way to use it to pay. The number of mobile payment systems increases by the day.

"We are seeing a revolution in the way that people use money," says Piers Boucher, senior manger of e-business at electronic money maker Mondex, "but it is up for grabs which product starts to get dominance."

'Dirty money'

The problem is that at the moment the only viable way to spend money while on the move is to use your credit card. But many people are reluctant to use these because of fears about their details being stolen or misused.

Spend your money, take your chances

Also credit and debit cards are not appropriate for spending small sums of money, such as when you buy a newspaper or a sandwich.

Pressure for change is also coming from the banks that, contrary to popular belief, don't like cash.

They like the value inherent in it but they hate transporting all those heavy coins and counting all those grubby, bulky notes. They would prefer it all to be electrons that cost a fraction to process and are much easier to move around.

Mondex is working with its partners on a way to build its electronic money application into the smartcards in every mobile that holds details about its owner. The result will be a mobile that doubles as a wallet and portable cash machine.

Small purchases could be made on the spot by taking digital cash out of the amount stored on the phone; larger purchases could involve a call to your bank, which will then send over the loot.

Electronic coins

Trials of this system are due to accelerate next month when smartcards become available with a memory big enough for both Mondex and mobile subscriber information.

There are other ways to get money on the move

Making purchases with Mondex is akin to handing over "real" money - unlike paying by credit or debit card, the purchaser's details are not recorded in small transactions.

Mr Boucher believes this anonymity could prove popular.

"It really allows people to have their money in their pocket."

But there is a lot of competition out there, with new wireless and internet payment systems being developed every day.

Some, like the German Paybox system, require nothing more than a mobile and a bank account, and use a pin number to authorise payments. Some cutting edge geeks in Sweden already use it to pay for taxi trips.

Paybox pushes its system as a good way to pay for pizza deliveries and top-ups for pre-paid phones. So far, it has no plans to sign up high street shops.

Others, such as Earthport, ask users to corral part of their cash into a special account, which is spent using phones or via the web. Earthport has signed deals with Egg and Barclays.

Shop 'til you drop

One payment system catching on in Japan is an electronic purse called CoCyph that clips on the end of a mobile phone. The purse acts like a debit card and spends money its owner has paid into a separate account.

Information about the shop's CoCyph account and the price of the goods purchased are scanned in using an infrared barcode reader on the clip-on gadget. This is sent across the mobile phone network and money is transferred behind the scenes.

CoCyph will be launched in Japan in February.

As yet, it is an open question as to which one will prevail. All of them have to go a long way to beat the convenience of cash. It is probably going to be easier to pay by pulling coins or notes out of a pocket than it is to use a mobile for some time to come.

One thing is clear, the companies that get it wrong will certainly pay for their mistakes.