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LAS VEGAS -- Palm has partnered with payment equipment vendors to create a system that will let you charge on your credit card using your handheld this year, Palm's chief executive officer has announced.

To prove the point, Palm Chief Executive Carl Yankowski performed what he called the world's first commercial credit card purchase using a personal digital assistant. Using the infrared port on his Palm, Yankowski beamed his personal credit card information to a cashier at a mock Sharper Image store in a demonstration at the Consumer Electronics Show here.

"This may be Las Vegas, but there's no smoke and mirrors here. This is the real McCoy," Yankowski said. "This is my real Visa, I'm probably going to get a real bill for this--in fact, I definitely am."

The electronic credit card demonstration is the first step in Palm's long-term vision to turn its handheld computers into "EWallets" that could replace the bundle of cards and paper that most of us carry around in our wallets. Palm wants to digitize your drivers license, library cards, health insurance cards, and even photos of loved ones as well as credit and debit cards, Yankowski said.

"Later this year you'll be able to use your Palm to make secure point of sale transactions as if a debit or credit card were in the device itself," the Palm chief promised. "Next holiday season we feel you'll be able to do your Christmas shopping by beaming your way through the checkout."

Simple, but Safe?

One CES attendee says he is impressed by the technology, but wants to know how his sensitive data would be protected before he goes on an electronic shopping spree.

"The thing that struck me was that my Palm could easily get stolen. That's not to say it doesn't work, but I'm not sure that the technology is quite there yet," says Walter Minkel, a technology editor with the School Library Journal, a professional publication for librarians.

In the demonstration, Yankowski entered a personal identification number to access an embedded Visa card application on his Palm. He then beamed his card information to the point of sale terminal. The encrypted data was transferred to the merchant's own accounting system, and Yankowski received both a paper receipt and an electronic receipt for his Palm.

Yankowski will get the bill for his credit card purchase the old-fashioned way, by snail mail, said a Visa representative at the demonstration.

The point of sale terminals are by Groupe Ingenico, which worked with Palm, VeriFone, and Visa to build the payment system. It is likely to be used initially by hotels, restaurants, car-rental companies, clubs, and department stores, because those outlets account for about a third of the 3 million Ingenico terminals used now, the company says.

Direct to Your Palm

The EWallet system may also shoot you electronic coupons, automatically prompt you about special offers, and track loyalty programs such as air mile accounts, Yankowski said.

His demonstration highlighted a speech in which the Palm chief urged consumer electronics manufacturers to focus on relevance, simplicity, and ease of use when designing digital products for consumers. The three qualities have led to Palm's success, he says.

Yankowski took several jabs at both the PC and competing PDAs based on Microsoft's Pocket PC platform, criticizing both as too complicated and feature-laden. While Palm commands 75 percent of the PDA market by some analysts' reckoning, Microsoft's Pocket PC platform has made gains since Compaq released its IPaq last April.

Yankowski also announced that Palm has added another licensee: Garmin, which makes global positioning system devices, will use Palm's software in a handheld computer that will be able to pinpoint its holder's location and run other Palm applications. Garmin expects to ship its first product in early 2002, Yankowski said.

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