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Mobile payments 2010 Market analysis and overview

150+ mobile payment initiatives inside


‘Mobile payments 2010’ illustrates the complexity and diversity of the mobile payments market. In particular it highlights the different approaches between developed nations focusing on solutions utilising existing banking infrastructures and developing nations currently implementing more proprietary MNO driven solutions. Some of the key challenges for market development are very well explained, the report is therefore good reading for anyone wanting to obtain a high-level picture of the market status. Liisa Kanniainen, Executive Director of Mobey Forum.


Mobile payments 2010 Market analysis and overview

Publisher:

Innopay

Editors:

Chiel Liezenberg (Innopay) and Ed Achterberg (Telecompaper)

Authors:

Remco Boer, Tonnis de Boer (Innopay)

Edition Version 1.0 1 November 2009 ISBN/EAN 978-94-90587-01-7 Copyright Š Innopay BV and Telecompaper BV All rights reserved


Preface You are reading the report ‘Mobile payments 2010 – Market analysis and overview’. This report is written and published by Innopay in cooperation with Telecompaper and is endorsed by the Executive Director of Mobey Forum.

We are witnessing the second wave of interest in mobile payments. Like the first, this second wave is characterised by the launch of a large number of pilots, utilising a variety of channels and technologies. With high perceived demand and accessible technology for realisation, the growth in the number of pilots around the globe is now accelerating, with a notable increased focus on (local) money transfer and remittances. Despite the flurry, sustainable commercial success is rarely achieved. In developed countries with well developed and redundant transaction infrastructures the effect of failure will be negligible. Better luck next time. But, in developing countries where alternative transaction infrastructure is lacking, failure of mobile payment initiatives could result in serious long term value dilution of the mobile channel. If the mobile payment channel is tainted by lack of trust or reliability as a result of cutting corners in pilots, there is no alternative channel for financial services delivery to fall back on, relegating these economies back to square one. Service providers and regulators in all countries involved should take notice of this and ensure that every measure is taken to get mobile payments – in pilot or production- ‘first time right’.

The aim of this report is to contribute to the further understanding and structuring of mobile payments, allowing decision-makers to better find their way in this complex matter. It is intended for the entire mobile payments industry, including merchants, financial institutions, mobile network operators, handset manufacturers, scheme organisations and policy makers. The report consists of two parts. Part 1 elaborates on the trends, developments and issues in the field of mobile payments. Part 2 provides an overview of more than 150 mobile payment initiatives from around the world. All details concerning mobile payment methods and specific mobile payment products are based on information that was publicly available when this report was written during the summer of 2009. Although this report does not claim to provide a complete description of the market, it is felt that it presents an overview of the main and relevant developments.

Finally, this report has been written with the utmost care. If you feel that, despite our efforts, it contains information that is unclear, erroneous and/or missing, we appreciate it if you could let us know. Please mail us at info@innopay.com.


Innopay on Mobile payment Innopay is an independent full service consultancy firm specialised in payments and related transaction services. It is our vision that: —

Globalisation increasingly leads to a network economy.

Electronic infrastructures enable industries to cooperate in networks, in real-time.

Internet and mobile are developing into true transaction channels, creating new transaction contexts.

New contexts require new transaction services and new options emerge in existing contexts.

Transaction services are part of two-sided markets, with sophisticated network effects.

Development of successful transaction services requires thorough understanding of the context. Development is complex and costly and asks for specialist expertise and a specific approach.

Innopay has been active in mobile payment since 1999. Several of our senior consultants have experienced the rise and fall of the first wave of mobile payment initiatives and the current upcoming second wave first hand. We have come to recognise that mobile payments are greatly dependent on the economic, regulatory and cultural context. The European marketplace is very different from that in developing countries. Where in the EU there is a strong focus on NFC technology and key issues include the business case, interoperability and positioning, in developing countries the focus is on remittance and money transfer solutions and associated regulation, funding and risks. Based on our experience we have created the ‘Innopay Transaction Context Model’ (parts of which are described in chapter 3) to better understand the success factors for mobile payment services development. Our services address three domains: —

Help you as a professional or regulator to ‘structure & understand’ the mobile payment services industry.

Help you as a provider to ‘develop & manage’ mobile payment business, services and products.

Help you as a corporation to ‘choose & use’ mobile payment solutions.


Mobile payments 2010 - 6

Some of our references cases include: —

Market analysis on introducing mobile payments in a developing nation for a leading bank.

Business development in using NFC stickers as contactless payment method.

Development and piloting of a mobile micro payments solution for a large multinational bank.

Product development of an SMS payment solution for a large international bank.

Product development and prototyping of a voice recognition mobile payment method for a large international bank.

Innopay is a member of the European Payments Consulting Association (EPCA) and the Payment Systems Market Expert Group (PSMEG) of the European Commission and an associate member of the Euro Banking Association (EBA). Innopay’s other key practices include: online payments, e-invoicing, e-identity, cards and related regulation. On most of these topics we regularly publish leading industry reports which can be downloaded for free. For more information visit www.innopay.com or contact us directly at info@innopay.com or +31 20 6580651.


Contents Preface.......................................................................................................... 4 Innopay on Mobile payment................................................................................ 5 Management summary..................................................................................... 10 The attraction of mobile payments ...............................................................10 Towards a clearer definition of mobile payments ..............................................11 In which situations would mobile payments be successful?...................................11 Recent technical developments and their implications .......................................12 Lessons, trends and issues from analysis of global initiatives ................................12 Stakeholder cooperation and standardisation...................................................13 Seizing the opportunity..............................................................................13 PART 1 MARKET ANALYSIS 1

2

3

4

Introduction to this report ....................................................................... 15 1.1

Increased market activity around mobile payments ...................................15

1.2

The attraction of mobile payments .......................................................16

1.3

Trends and developments for 2010........................................................17

Towards a clearer definition of mobile payments .......................................... 20 2.1

What exactly is a mobile payment? .......................................................20

2.2

Scoping of this report ........................................................................22

2.3

Simplifying further through classification................................................23

In which situations could mobile payments be successful? ............................... 24 3.1

Risk is the key driver for transactional behaviour ......................................24

3.2

Perceived risk is determined by the ‘transaction context’ ...........................25

Recent technical developments and implications........................................... 32 4.1

Developments in contactless technology .................................................32

4.2

NFC Security issues ...........................................................................36

4.3

(Non-)availability of NFC enabled phones................................................33


Mobile payments 2010 - 8

4.4

Circumventing NFC-phones .................................................................34

4.5

Non-payment use of NFC ....................................................................35

4.6

SMS as a technology for mobile payments................................................41

4.7

SMS security issues ...........................................................................42

4.8

USSD as a technology for mobile payments ..............................................43

4.9

Increased broadband and the merging of channels.....................................44

4.10 Emerging ecosystem for Point of Sale NFC mobile payments.........................44 4.11 Conclusion .....................................................................................48 5

6

Lessons, trends and issues from analysis of global pilots and initiatives .............. 50 5.1

Mobile payments..............................................................................50

5.2

Mobile parking payments....................................................................52

5.3

Mobile ticketing for public transport or events .........................................52

5.4

Mobile POS .....................................................................................53

5.5

Mobile money transfer: remittance .......................................................55

5.6

Lessons about drivers and barriers ........................................................56

5.7

New opportunities in the Payment Services Directive (PSD)..........................60

Stakeholder cooperation and standardisation ............................................... 64 6.1

Why stakeholder cooperation has been hard to achieve ..............................64

6.2

Standardisation ...............................................................................66

PART 2: MARKET OVERVIEW 7

Mobile payment services and pilots ............................................................ 73 7.1

Europe ..........................................................................................76

7.2

North America............................................................................... 110

7.3

Latin America................................................................................ 131

7.4

Middle East and Asia ....................................................................... 137

7.6

Australia...................................................................................... 170

7.7

Africa ......................................................................................... 171


9 - Contents

ANNEXES Annex I: Glossary ..........................................................................................190 Annex II: References......................................................................................197 References........................................................................................... 197 General Internet resources ....................................................................... 198 Annex III: About the editors and publishers.........................................................200


Management summary Mobile payments are hot! Again! There has been a lot of recent activity in the market around mobile payments with many pilots and live applications being launched around the world. For those who remember, there was similar activity at the turn of the millennium when there were also predictions of aggressive growths in mobile payments. However this growth did not materialise and mobile payments have in fact largely remained an undelivered promise for more than a decade. While the attraction of mobile payments is widely recognised there are some key development areas that must be given attention to make mobile payments a success.

The attraction of mobile payments The attraction of mobile payments is unquestionable. For financial institutions mobile payments are a potential method for protecting the current account and surrounding loan products and avoiding further disintermediation from customers. They also provide the possibility of reducing cash and cost effectively servicing under-banked geographies. For Mobile Network Operators, mobile payments are an attractive proposition for achieving a return on the investments made in infrastructure over the last two decades through both extra payment related revenues and the associated increase in air time and data use. They also hold the possibilities of allowing for diversification into other areas of the consumer’s needs and lifestyle and reducing churn amongst existing customers. For merchants, Point of Sale mobile payments could provide faster throughput at the checkout and the ability to send real time marketing messages to the consumer. However, faster throughput could also be achieved through contactless cards and it is yet unclear whether consumers would actually want or appreciate real time marketing messages from the merchant on their phone. Remote mobile payments provide another channel for merchants and as such are an attractive proposition if the use of the channel can gain wide scale adoption at lower costs than existing channels. From the perspective of the end consumer, the mobile phone has achieved ‘permanent share of pocket’, i.e. next to the wallet and keys it is the object that is most likely to be constantly with the consumer. Furthermore, consumers are increasingly more comfortable with the mobile phone fulfilling more than one function, with mobile devices slowly morphing into multi-media and multi-application devices. The benefits and opportunities seem clear for all parties involved.


11 - Management summary

Towards a clearer definition of mobile payments In this report a proposal is made to view payments separately from other functions that can be performed with the mobile device, such as ordering or receiving digital goods. The actual process of payment carries a high emotional weight with the consumer and merchant as both parties attempt to minimise payment risk (risk that the payment is not executed or guaranteed), minimize costs and to maximise usability. The creation of mobile payment solutions needs to take these behavioural considerations around a payment into account. Mobile payments are thus very different in user experience and business model from mobile banking or mobile authentication and should be treated as separate subject.

In which situations would mobile payments be successful? The key to beginning to answer this question is the realisation that a payment involves tension between a merchant-consumer desire to minimise risk and costs and maximise usability. Analysis of several contexts through this realisation shows that: Purchase of non physical goods (e.g. ring tone, parking, etc) would benefit from payment solutions that link directly to existing financial instruments such as current accounts and cards and allow for the use of these instruments without registration. NFC solutions should prepare for a long and hard battle to break into the Point of Sale market because of the attraction of existing solutions such as debit and credit cards. The current focus of these solutions is the promotion of their usability features (e.g. contactless, interactive communication on mobile device, etc). The key deterrent from consumer and merchant sides will be their high costs. While providers may gain temporary success with early adopters or niche industries they must focus on bringing down costs to establish any reasonable market share Public transport is likely to provide the highest volume potential for mobile payments. However it is not clear what advantages mobile payments bring in this context over contactless payments. Remote Point of Sale, e.g. vending machine has obvious benefits from mobile payments if costs of these solutions can be kept low.

In addition, the needs of the end consumer need to be taken into account. Most service providers are aware of the behavioural barriers of new products such as economic switching costs (e.g. activation fees, learning costs, obsolescence fees, etc) but what service providers often don’t take into account are the psychological barriers associated with behavioural change. These psychological barriers include the overvaluation of current methods of payment and loss aversion where people are more upset at losing a benefit than they are delighted at gaining a similar benefit. These barriers imply that one of the keys to successful adoption of a new innovation is the degree of change demanded from the


Mobile payments 2010 - 12

receiver of the innovation. The smaller the consumer’s change in behaviour needs to be, the greater the chances of success are.

Recent technical developments and their implications Contactless technology has matured in the last few decades with the ability to communicate two-way, faster throughput and better security. These changes have made this technology suitable for use in payments. While this technology has received the most press in relation to payments it is in other non payment applications such as mobile ticketing, loyalty and smart advertisements that this technology is believed to be able to offer the most benefit. The success of the payments application of NFC will be dependant on the degree of success that these non payment applications achieve in the market and the degree of compatibility with these non payment applications. SMS, while a simple and easy to use technology has a number of limitations that complicate its use in payments. SMS uses store and forward technology, i.e. the message is stored with the operator on its way to the recipient or until the recipient becomes available. Often there is a maximum time limit for which the operator holds the message for delivery in case the recipient’s phone is unavailable. Also, SMS does not use any encryption and finally there is no proof of delivery within the SMS protocol. Most SMS-based mobile payment methods do provide a proof of delivery but this requires a second separate message to be sent which increases the costs of a single transaction and is especially not economical if transferred amounts are small.

Lessons, trends and issues from analysis of global initiatives The mobile payment services offered differ per region and we have seen a strong increase in the number of mobile remittance services across the world, especially in the USA. In developing countries which are underserved by the banking industry, the focus remains on mobile money transfer via SMS. In other regions the focus is on POS and mobile ticketing with the notable exception of the USA and Latin America where we see a strong focus on mobile remittance. In some Asian countries there is a low internet penetration, a comparatively high mobile adoption and a push by the operators to offer mobile payments like mobile POS and mobile ticketing. In Western Europe the situation is different again as the region is generally not under-banked and has a high internet penetration but the uptake of mobile internet is relatively low, compared to Japan for example. The initiative listed in this report show that SMS and NFC are most frequently used to complete payment although the number using WAP/internet has risen.

Many mobile payment initiatives are still in a pilot stage, with a few notable exceptions that have been commercially launched on a large scale. Examples of widely used


13 - Management summary

commercially available services are Paybox in Austria, G-Cash in the Philippines, NTT DoCoMo’s Osaifu-Keitai in Japan and M-PESA in Kenya. Our analysis of mobile initiatives around the world reveals the following key drivers and barriers for the adoption of mobile payments.

Drivers

Barriers

Offering added value for consumers, merchants

Complex value chain with lack of co-operation

mobile operators, financial institutions and other

Financial regulation

participants in the ecosystem User experience/easy to use

Security/risk (perception of security/risk) Cost Unavailability of a broad range of mobile payment capable handset Lack of interoperability/lack of technology standards

Stakeholder cooperation and standardisation One of the commonly cited reasons for the relative lack of success of mobile payments so far has been the absence of productive cooperation between key stakeholders, namely the financial institutions and the mobile network operators. There have been many reasons for this lack of cooperation, some of these (in no order of priority) are: desire by players in each industry to diversify from their core businesses, debate over who ‘owns’ the customer, difficulties around branding in a cooperative model, debate over the location of the secure element and the inability to arrive at a workable revenue sharing model. Without the creation and usage of standards for mobile payments the industry risks the development of non-interoperable islands of pilots and solutions. This report describes some of the prominent attempts at standardisation including the GSMA, Mobey Forum, the NFC Forum and EMVCo.

Seizing the opportunity Mobile payments are currently again on top of mind. In this report we show that while mobile payments hold substantial attraction and potential there are several key issues that must be addressed to ensure success.


Part 1 Market analysis


1

Introduction to this report

1.1 Increased market activity around mobile payments There has been a lot of recent activity in the market around mobile payments with many pilots and live applications being launched around the world. For those who remember, there was similar activity at the turn of the millennium. At that time there were also predictions of aggressive growths in mobile payments, however this growth did not materialise. Mobile payments have in fact largely remained an undelivered promise for more than a decade.

In 2002 market experts forecast that by 2006 â‚Ź55 billion would be processed through mobile payments. However, in 2006 the same sources predicted the market to reach only â‚Ź10 billion by 20101. In 2009, one source predicted that in 2013 an absurd $800 billion2 would be transacted by phone while another source predicted a much more conservative $1.5 billion for the United States alone3. The reality is that market size and growth fall far short of most predictions and that growth is anything but given.

80

Market size in billion USD

70

Mobile Monday prediction

Juniper prediction

Juniper actuals 2003-2007

60 50 40 30 20 10 0 2002

2003

2004

2005

2006

2007

2008

2009

2010

Figure 1-1: The mobile payment market proves to be quite elusive.

1

www.mobilemonday.net/news/mobile-payment-market-to-reach-eur-55-billion-in-2006

2

www.marketwire.com/press-release/Xcellink-International-Inc-1031269.html

3

www.frost.com/prod/servlet/press-release.pag?Src=RSS&docid=165875378

2011

2012


Mobile payments 2010 - 16

While the attraction of mobile payments is widely recognised, there are some key development areas that must be given attention. These areas for attention suggest caution amidst the current excitement around mobile payments. These areas for attention are listed later in this introduction and discussed in more detail throughout this report but first the attraction of mobile payments for the major stakeholders is examined

1.2 The attraction of mobile payments 1.2.1

For financial institutions (FIs)

For financial institutions4 mobile payments are first and foremost a defensive play. From a retail banking point of view, financial institutions are primarily focused on protecting the current account and surrounding loan products. Retail payments including mobile payments are more often than not a loss leader for these more profitable products. From a wholesale banking point of view financial institutions have already been disintermediated to some degree from their wholesale customers by third parties in the area of online payments. Financial institutions are keen to avoid the further worsening of this situation through third party mobile payments. Mobile payments also hold the allure for financial institutions of assisting in the ongoing battle to reduce the use of cash and its associated costs. Furthermore in developing geographies mobile payments offer financial institutions the opportunity to cost-effectively capture and service non and under-banked communities.

1.2.2

For mobile network operators (MNOs)

For mobile network operators mobile payments are an attractive proposition for achieving a return on the investments made in infrastructure over the last two decades through reduction of churn, extra payment related revenues and through associated increases in air time and data use. For mobile network operators mobile payments also hold the possibilities of allowing for diversification into other areas of the consumer’s needs and lifestyle.

1.2.3

For technology providers

As with any technology led development, mobile payments hold the most promise for technology vendors and systems integrators. These organisations are positioning themselves to provide the infrastructure and messaging for mobile payments and in the process offering to act as a trusted intermediary between the banks and the mobile network operators.

4

See glossary for definition of ‘financial institution’ and other payments terms


17 - Introduction to this report

1.2.4

For handset manufacturers

The success of the use of the mobile device for payments has the potential for resulting in a substantial increase in both sales to new customers but also for the renewal of existing devices in the market to ones that are payment capable.

1.2.5

For merchants

For merchants, Point of Sale mobile payments could provide faster throughput at the checkout and the ability to send real time marketing messages to the consumer. However, faster throughput could also be achieved through contactless cards and it is yet unclear whether consumers would actually want or appreciate real time marketing messages from the merchant on their phone. However un-manned or remote Point of Sale locations could benefit from mobile payment by allowing a reduction in servicing costs. Remote mobile payments provide another channel for merchants and as such are an attractive proposition if the use of the channel can gain wide scale adoption at lower costs than existing channels.

1.2.6

For consumers

From the perspective of the end consumer, the mobile phone has achieved ‘permanent share of pocket’, i.e. next to the wallet and keys it is the object that is most likely to be constantly with the consumer. Furthermore, consumers are increasingly more comfortable with the mobile phone fulfilling more than one function, with mobile devices slowly morphing into multi-media and multi-application devices. However, does this mean that end consumers are ready to abandon the wallet and rely primarily on the phone, which is more a lifestyle or leisure tool, for the important task of handling their payments?

1.3 Trends and developments for 2010 The un-debatable attraction of mobile payments for certain market parties and the resulting market interest is causing significant investment in the creation of mobile payment products and in the execution of pilots. The following are the key trends and developments for 2010:

1.3.1

Towards a clearer definition of mobile payments

Today, there are many ways in the market to define what a mobile payment is and almost as many ways of categorising mobile payments. Industry professionals cannot come to an agreement on the exact definition of a mobile payment. There is often confusion and overlap between mobile payments, mobile banking, and the use of the mobile phone to simply order goods or receive delivery (while paying by other means). This lack of coherent definitions and mutually shared categorisations across the industry is one of the factors


Mobile payments 2010 - 18

limiting cooperation, standardisation and contributing to the creation of a lot of unnecessary noise around mobile payments. Without a clear and widely agreed definition and taxonomy it is difficult to envisage the rapid and consistent growth of this business. In section 2 a proposed definition and categorisation is provided that takes the best of what is out there in the market today and provides the foundation for this report.

1.3.2

In which situations would mobile payments be successful?

Core to the analysis in this report is the study of the various contexts in which mobile payments may be successful. It is likely that many of the pilots and initiatives being quickly launched today have not examined this critical question closely enough. The prevalent thinking in the market today seems to be that just because mobile phones are ubiquitous and interactive that they are therefore a natural choice for the addition of payment functionality. This reasoning may prove to be false. Not all things that ‘are logical’ also actually happen. Context analysis looks at the payment behaviour of the various actors in a transaction. By taking into account the goals and outcomes that the actors want to achieve in a transaction this analysis can help to predict the payment behaviour of the actors and their desired characteristics from payment methods in various transaction situations. Context analysis is explained in section 3 and applied to various situations to arrive at a view of potential success of mobile payments in those situations. Mobile payments are an innovation. Introduction of innovations into markets of embedded incumbents requires careful consideration of the behavioural aspects of adoption of innovations. In the latter parts of section 3 these behavioural aspects are examined and some strategies provided for overcoming the affiliation of payments users to incumbent payment products.

1.3.3

Recent technical developments and their implications

What have been the recent advances in contactless technology? NFC payments have received a lot of press of late but what exactly is the status of introduction of NFC enabled phones? What are the most popular non payment applications of NFC technology and what are the implications for mobile payments? How does SMS technology work and what are its advantages and disadvantages for an application such as payments? The availability of high speed broadband on mobile devices is increasing, what implications if any does this have for the development of NFC and SMS based mobile payments? In section 4 of this report these recent technical developments and their implications for the development of mobile payments are examined.


19 - Introduction to this report

1.3.4

Lessons, trends and issues from analysis of global initiatives

There are a number of mobile payment pilots and initiatives in motion around the world today. Different geographies have different levels of progress and maturity in different applications of mobile payments. For example several African countries make use of mobile payments for peer to peer remittance and to reach the un-banked. Asian countries such as Japan and South Korea are well advanced in the use of the mobile phone for Point of Sale payments and the mobile device in these geographies is slowly morphing into a single device with multi – payment applications. Europe is actively experimenting with Point of Sale NFC payments. What can be learned from each application of mobile payments? What geography specific contexts should be taken into account? In section 5 of this report the current various applications of mobile payments and the trends and characteristics of these applications are examined.

1.3.5

Stakeholder cooperation and standardisation

It is generally accepted that cooperation between stakeholders (at the least financial institutions and mobile network operators) is required to bring mobile payments to the mass market. While mobile network operators have tried in the past to address the market independently they have generally found it difficult as they lack the financial and risk management expertise of the financial institutions. The resulting mobile network operator only solutions have generally been limited to market niches (e.g. premium SMS). Why has such cooperation between these stakeholders been so difficult to achieve so far? In section 6 the current barriers to cooperation are examined. Similarly standardisation is considered to be essential to the long term survival and growth of mobile payments. There have been and continue to be several attempts at standardisation. Section 6 of this report describes the importance of standardisation for mobile payments and looks at some of the current attempts and their status.


2

Towards a clearer definition of mobile payment

Mobile payments are a hot topic in financial, telecommunication and technology circles right now. However, professionals across these industries have not yet come to a clear and mutually agreed definition and classification of mobile payments. This lack of agreement and specifically the bundling of payments with other processes such as ordering and delivery creates confusion and slows the development in this field. In this section a proposal is made to view payments separately from other functions that can be performed with the mobile device. Additionally a simple classification of mobile payments by location and funding method is offered. In section 3 of this report, classifications are examined more closely and several alternative possibilities are offered for classifying mobile payment methods.

2.1 What exactly is a mobile payment? One of the issues with mobile payments in the market today is the lack of a clear and shared definition across the industry. There is often confusion and overlap between a mobile payment, mobile banking, and the use of the mobile phone to simply order goods or receive delivery (while paying by other means). There are four main areas for the use of a mobile phone in the context of a financial transaction. These are:

Mobile order – transactions where the mobile phone is used simply to initiate the order (but not to make the payment). Mobile payment – a payment (transfer of funds in return for a good or service) where the mobile phone is involved in the initiation and confirmation of the payment. The location of the payer is not important: he may or may not be ‘mobile’ or ‘on the move’ or at a Point of Sale.

Mobile delivery - transactions where the mobile phone is used simply to receive delivery of goods or services, e.g. an event ticket (but not to make the payment).

Mobile authentication – use of the mobile device to authenticate the user either as part of a payment transaction or to give access to some information or functionality.

Mobile banking – access to banking functionality (query + transaction) via the mobile phone. This includes the provision of part or all of the banking functionality already provided by banks over the Internet in the form of online banking.

In our definition initiating a payment such as a bank transfer while within the bank’s provided mobile banking environment would not be classified as a mobile payment but for the sake of simplicity would remain simply a feature of mobile banking.


21 - Towards a clearer definition of mobile payment

The implication of our proposed definitions is as follows: Payments made within the confines of the bank provided mobile banking environment can be effectively removed from the detailed discussion around mobile payments. Such payments can be discussed separately as attributes or features of mobile banking. Of the current applications of the mobile phone in a transaction, only a subset involve actual payment with the mobile. The large majority of applications simply use the mobile phone to initiate the order, receive delivery or authenticate the consumer. Some examples may help to clarify these definitions further: Example

Mobile

Mobile

Mobile

Mobile

Mobile

order

payment

delivery

authentication

banking

No

No

No

No

Yes

No

No

No

No

Yes

No

Yes

No

No

No

Purchase of a mobile

Yes (can be

Yes (if deducted

Yes

No

No

ring tone

mobile or

from pre-paid

Jamster (United

internet)

amount or

No

No

No

No

No

Initiate a bill payment via mobile banking environment M-Banxafe (Belgium) Transfer funds by submitting an instruction to the bank through a bank provided mobile banking environment M-Banxafe (Belgium( Payments at a physical point of sale Paybox (Austria)

billed by MNO)

Kingdom) m-parking

Yes (start and

Yes (amount is

Mobillzahlen

end)

charged to the

Handyparken

telco bill or

(Germany)

deducted from pre-paid amount)

m-ticketing

Yes (can also

No (payment is

Yes (e.g. 2D

Touch&Travel

be via

generally not by

ticket or

(Germany)

Internet or

mobile)

reservation

other means)

code)


Mobile payments 2010 - 22

Example

Mobile

Mobile

Mobile

Mobile

Mobile

order

payment

delivery

authentication

banking

Yes

No, payment

Yes

No

No

(many mobile

takes place via

(notification

operators)

other means

and balance

(cash/card)

upgrade)

Yes (initiation

No

No

No

m-top up

Vending

No

and

Mobipay (Spain)

confirmation) Smart billboard/tags

Yes

Yes

Yes

No

No

Yes

Yes

Yes

No

No

(confirmation)

(notification

Yes

No

People’s Bank (Georgia) P2P remittance M-Pesa (Kenya)

beneficiary) Internet (or other

No

No (initiation

channel) payment

and

where the mobile

confirmation of

phone is used as part

the payment

of the

are still online)

No

authentication process BankID (Norway) Table 2-1: Examples of mobile payment definitions

The current overlap by the industry of such diverse functions as banking, order, delivery and authentication under the common label of mobile payments has some negative consequences for the development of mobile payment solutions. By confusing and using the term mobile payments for non payment functions such as banking, order, delivery and authentication the industry is diluting or blurring the specific needs of each function and in the process not adequately identifying and meeting these needs.

2.2 Scoping of this report The scope of this report is limited to mobile payment, as defined in the previous paragraph: a payment where the mobile phone is involved in the initiation and confirmation of the payment.


23 - Towards a clearer definition of mobile payment

A method that is included under the definition of mobile payments, but which is not included in great detail in this report is premium SMS and premium rate phone numbers. The charges for these services are deducted from the pre-paid credit of the user or billed via the MNO. The reason is the availability of a plethora of services based on that principle and that the developments are not really interesting for the field of mobile payments. Services are very similar to each other and almost every MNO supports these services. In part 2 of the report, where we give a description of the most relevant payments initiatives, we will also pay attention to interesting mobile banking and mobile ticketing. The more theoretical part 1 focuses on mobile payments, minus premium rate SMS and premium rate phone numbers.

2.3 Simplifying further through classification Given the above definition of a mobile payment there are two dimensions for further classification, these are: —

By location, specifically remote or point of sale

—

By funding method

These dimensions are defined in more detail through the diagram and accompanying examples of applications below:

Table 2-2: Classification of mobile payment initiatives

In this section a usable definition of mobile payments has been offered and a clear differentiation made between mobile payments and other services performed on the mobile device. Examples have been provided of these differences. Also a simple categorisation has been offered for mobile payments and popular initiatives and pilots have been plotted within this categorisation. In the next section some of the situational and contextual factors that can impact the success of mobile payments are examined.


3

In which situations could mobile payment be successful?

This section is based on academic research by Innopay that shows that the selection and usage of payment solutions depends strongly on situational factors defining the perceived risk5.

Buyers make different judgments than sellers and therefore any payment solution balances risk mitigation, usability and cost between buyer and seller. A transaction occurs when both parties experience an acceptable balance between the three factors. Consumers tend to overvalue existing payment methods while businesses overvalue new innovative payment methods, causing most new payment methods to fail. Businesses introducing new mobile payment methods must take this bias into account and be prepared with strategies discussed in this section.

3.1 Risk is the key driver for transactional behaviour The amount of perceived risk is determined by the timing and location of the: —

Agreement.

Payment.

Delivery.

In traditional commerce the Agreement, Payment and Delivery take place on the same moment. This is the case in a typical retail setting (purchase of furniture being a notable exception). The amount of risk between buyer and seller is distributed evenly: the buyer receives delivery when the seller is paid.

With the introduction of media (mail, internet and mobile phone) things changed drastically. First there was the introduction of mail order in the middle of the previous century. Then came telephone and internet ordering and now it is possible to order and pay with your mobile. ‘Distant commerce’ has decoupled time and place thereby introducing feelings of risk associated with each step in the process. Both consumers and business thus feel variying degrees of risk for concluding the agreement, the payment and the delivery.

5

For the detailed academic overview of the concepts in this section, see ‘Understanding buyer and seller behaviour for improved payment product development’, C. Liezenberg, D. Lycklama, H. Smorenberg. Journal of Payment Strategy & Systems, April 2007


25 - In which situations could mobile payment be successful?

When applying this concept to mobile payments it will become clear that minimizing perceived risk is conditional for any success. First a better understanding of these risks is required.

3.2 Perceived risk is determined by the ‘transaction context’ The perceived risk by sellers and buyers is strongly determined by the context of the transaction. From analysis and practical experience, it was found that four generic factors constitute the transaction context, which in effect determines the risk perceived by the actors in a transaction: 1. Timing The timeline and order in which the processes are executed. Processes can be executed simultaneously or disconnected. In the latter case the order of Payment and Delivery can be swapped. This leads to three generic types of timings as shown in Figure 3-1below:

Figure 3-1: Different timing and order of the Agreement, Payment and Delivery in the transaction processes

2. Location The location of a transaction process, physical or virtual. Location can also be related to the geographical distance between buyer and seller. Examples of physical locations are shops, markets and vending machines. Virtual locations refer to ‘channels’, such as mobile, internet and email. Virtual and/or distanced locations of the actors transacting typically increase the Risk perceived. 3. Relation The relation between the buyer and the seller. Three types of relationships are distinguished: anonymous, known and trusted. The type of relation influences the perceived risk for both parties. This context factor is a dynamic one: over time the relation between buyer and seller changes, changing also the risk perceived. Repetitive transactions (e.g. subscriptions, rent) typically lead to a higher degree of trust than incidental transactions. With low trust, parties will seek more guarantees during the transaction process.


Mobile payments 2010 - 26

4. Product The characteristics of the product delivered. Core characteristics are the value (high/low) and substance (virtual/physical). Especially the value of the product strongly determines risk perceived by both actors. High-value products require more guarantees than low-value products. Also the nature of the product influences the risk: e.g. small high value electronic products are an attractive fraud target. The substance of the product directly relates to the delivery channel. In case of electronic/digital products, these can be delivered through electronic channels. Physical products obviously can not.

3.2.1

The likelihood of success

For each context the table below shows the likelihood of success for mobile payment methods.

Context

Summary

Purchase of a ring

Mobile payment applications that debit from a current account would be popular for this

tone

context as long as a reputable party was perceived to be making the deductions (thereby reducing the perceived risk from the buyer). The currently popular payment methods in this context are fairly expensive which implies that new parties offering direct debit solutions can quickly establish cost differentiation and/or benefit from reasonable margin. Mobile payment solutions linked to virtual wallets are the least likely solution to be successful in this context because of the extra steps involved in setting up and maintaining the wallet.

Purchase of a CD in

NFC based mobile payment solutions will find it a long and hard battle to break into this

a shop

market because of the attraction of existing solutions such as debit and credit cards. The focus of current NFC solutions and pilots is predominantly on promoting their usability features (e.g. contactless, interactive communication on mobile device, etc). However our analysis shows that the key deterrent for NFC POS solutions from consumer and merchant sides will be their high costs. While providers may gain temporary success with early adopters or niche industries they must focus on bringing down costs to establish any reasonable market share.

Parking with a

Our analysis shows that direct debit from current account is the most suitable solution in

mobile phone

this context. The one main downside of this solution is the need to pre-register. Providers that can innovate through a solution that offers no registration requirements but still deducts the payment amount from the current account will find the greatest success in this market.

TV voting with SMS

This context has been ripe for a new innovative solution for a long time now. The existing solutions while highly usable are relatively extremely costly. A cooperative solution between mobile network operators and banks that uses the mobile device for payment confirmation but actually uses underlying debit or credit deductions to make


27 - In which situations could mobile payment be successful?

Context

Summary the payment would find success in this mature and highly profitable market.

Pizza order via

While cash is the current dominant solution in this context, an SMS based mobile solution

telephone

could successfully enter this market. Addition of the payment amount from the mobile device bill could be easily achieved given current market capabilities but would be an expensive option compared to the average transaction value. Again in this context, as for purchase of a ring tone, parking and TV voting mentioned above, a cooperative model between mobile network operators and financial institutions that deduct the amount from the current account would achieve success in this context.

Remittance

Within sending countries it is difficult to see advantages for the use of any other solutions besides online initiation of the remittance. Why would senders want to initiate via a retail outlet (more expensive) or via a mobile device (more cumbersome input) when they can do so online? Within receiving countries receipt of the amount on the mobile device sounds theoretically attractive in under-banked countries with high mobile penetration, or low online penetration. However in reality in such countries the receiver must eventually convert the electronic money into cash to spend it so the presence (and associated costs) of a retail cash dispersion outlet will remain.

Public transport

Contactless card solutions are a proven success in this context; successful implementations include Hong Kong – Octopus card and the London Oyster card. Migration of the contactless functionality to the mobile device would be a natural evolution. However mobile network operators and financial institutions will need to agree on a suitable revenue share that keeps the cost to the consumer at or below the costs of using card solutions for mobile NFC to be successful in this context.

Vending machine

SMS and NFC mobile solutions have obvious advantages in this context over cash if costs of these solutions can be kept low.

Table 3-1: Summary of score of payments methods in different contexts

Scientific literature6 presents the premise that more often than not sellers or solution providers are more excited and eager about their solution than the customers they target. Businesses spend billions of dollars improving existing products and processes only to find consumers roundly reject them. Studies quoted by Gourville state that over the last 25 years new products have failed at the staggering rate of 40%-90%.

6

‘Eager Sellers and Stony Buyers, Understanding the Psychology of New Product Adoption’, J. T. Gourville. Harvard Business Review, June 2006


Mobile payments 2010 - 28

3.2.2

Why innovations fail

Why do consumers fail to use innovative products even when these products offer distinct improvements over existing ones? Why do companies invariably have more faith in new products than is warranted? An analysis into the behavioural aspects of innovation introduction explains why so many products fail and outlines some actions that companies can take to improve their chances of success. New products often require consumers to change their behaviour. As companies know, those behaviour changes entail costs. In the case of new payment methods for example, consumers incur: —

Transaction costs, such as activation fees.

Learning costs such as learning how to use a new payment method and

Obsolescence costs for discarding existing methods and processes

All of these are economic switching costs that most companies usually anticipate. What businesses don’t take into account, however, are the psychological costs associated with behaviour change.

3.2.3

The psychological costs of changing

Many products fail because of a universal, but largely ignored, psychological bias called status quo bias: people irrationally overvalue benefits they currently possess relative to those they don’t. In the case of payment products this bias leads consumers to value the advantages of payment products they currently use more than the benefits of new ones and for business executives to value the benefits of innovations they’ve developed over the advantages of incumbent products.

Furthermore people tend to display a second psychological bias, loss aversion, i.e. they are more upset at losing a benefit than they are delighted at gaining a similar benefit. Therefore, it’s not enough for a new product to be better, unless the benefits (of the new product) far outweigh the losses (from not using the existing product), consumers will not adopt it. Status quo and loss aversion biases imply that one of the keys to successful adoption of a new innovation is the degree of behavioural change demanded from the receiver of the innovation. The less change demanded the less impact is likely from these two psychological biases in the innovation being accepted. This is depicted in the matrix below which plots behavioural change demanded from the consumer with the product change inherent in the innovation.


29 - In which situations could mobile payment be successful?

Figure 3-2: Classification of innovations along behaviour change and product change axes.

3.2.4

Easy sells

At the top left of the matrix are the ‘easy sells’. Examples from the realm of online payments are credit cards. Credit cards are a payment instrument that was never meant or designed for use online. However the product, with little to no modification can be used online, i.e. product modification is low. Furthermore, consumers are accustomed to using the credit card in the physical world and to use it online by entering the card details with their keyboard (instead of reading the card number to an operator on the phone for example or swiping it at a point of sale) is not a large behaviour modification. This is the reason why in countries where credit cards were already a popular payment instrument offline, they have also become a popular payment instrument online.

3.2.5

Smash hits

At the top right of the matrix there are the ‘smash hits’. Again an example from the world of online payments is the popularity of online banking based payment systems such as iDEAL in The Netherlands and Giropay in Germany. These payment methods use online banking processes and authentication mechanisms to authorize a payment. The original online banking product is modified considerably at its interfaces to serve this function so the product changes are high. However to the consumer they are still using their tried and tested online banking interface and authentication mechanisms to complete the payment so behavioural changes for the consumer are low. The high product changes and the limited behavioural changes have made these online credit transfer systems a ‘smash hit’ in the countries in which they have been implemented.

3.2.6

Sure failures

At the bottom left of the matrix are the ‘sure failures’, these entail little product changes but significant behavioural changes. An example in this category is the Wireless Access Protocol (WAP) which at the turn of the millennium was believed to hold much potential. The promise of WAP was to bring the familiar online interface to which a consumer was


Mobile payments 2010 - 30

accustomed, to the mobile phone. The product change or additional benefit to the consumer was low, they were accessing the same online functionality on their phones however the behavioural change was quite high as consumers had to contend with slow speeds due to low bandwidth on their phones and to navigating with the small keyboards on their phones. Needless to say WAP did not achieve much success.

3.2.7

Long hauls

At the bottom right of the matrix are the ‘long hauls’, these entail significant product changes and significant behavioural changes. An example in this category is NFC enabled mobile payments at the point of sale. The product changes are considerable, in most NFC pilots, the consumer need only swipe their phone in front of a contact less reader instead of fumbling with cash or swiping a credit or debit card. Furthermore the consumer can receive sales receipts, loyalty points and marketing messages and can check their balance and transaction history directly from their payment device. All functionality that existing Point of Sale payment devices, e.g. cash, cards etc can not deliver. However, while the product changes are high, the behavioural changes are also high for a consumer in moving from cash/cards to their phone as the payment device.

3.2.8

Strategies for successful mobile payment methods

What can introducers of new mobile payment methods do to overcome these behavioural barriers to innovation adoption and become a success? The first and foremost action is to recognize and acknowledge that these behavioural biases exist both in consumers and in the introducers of mobile payment methods. The next step for mobile payment methods which generally fall under the ‘long haul’ category is to be patient and prepare for a long product acceptance period and to not deplete resources too quickly. Another approach to managing consumer resistance is to strive for greater than 9X increase in new product benefits making the relative benefits of the new innovations so great that they overcome the consumer’s outweighing of potential losses. An example of this from the world of payments has been the success of debit cards at manned point of sales in some Western European countries (e.g. The Netherlands, Finland, etc), where the benefits such as; low cost of processing even for small transaction amounts, fast throughput through the ability to swipe and authenticate even before the order is completed on the register and easily accessible and useful reporting have made the debit card more popular than cash. A third strategy is to simply eliminate the old product if possible and at the least make it far less attractive than the new innovation. A classic example of this has been the introduction of online banking over the last 10-15 years. Online banking as an innovation has involved significant behavioural change compared to visiting a physical branch. However where it has been successful its introduction has been invariably accompanied by


31 - In which situations could mobile payment be successful?

either a parallel closure of physical branches (removing the old product) or a surcharge for using the branch (making the old product less attractive). Another strategy is to simply make behaviourally compatible products; credit cards for use in the online world are an excellent example of this as mentioned above. An additional strategy is to seek out consumers or niches that do not currently use any incumbent product in that particular category. This is the reason why new product innovators invariably target children and teens to establish a niche and this may also be a useful strategy for mobile payment method innovators wanting to establish a niche in a market such as for example local peer to peer remittance. A final strategy is to find consumers who prize the benefits they would gain from a new product or only lightly value those that they would have to give up. These are the early adopters. Most of the NFC pilots across Europe are targeting such consumers and merchants and generally finding success with these early adopters.

In this section the importance of minimising risk and cost and maximizing usability in a payment transaction has been examined. Several situations have been reviewed in which mobile payments may be used and mobile payments have been compared with existing payment methods across the criteria of Risk, Usability and Cost. Also some strategies to overcome behavioural and psychological biases in adopting innovations have been proposed. In the next section recent technical developments and their implications on mobile payments are presented.


4

Recent technical developments and implications

The operation and success of mobile payments is inseparably linked to the key technologies that make mobile payments actually possible. In this context it is critical to understand the nature and limits of these technologies. In this section first the developments in contactless technologies are reviewed and the recent changes that have spawned the NFC phenomena are examined. It is shown that the commercial availability of NFC phones remains limited. Eager NFC-based payments initiatives increasingly rely on NFC-stickers, thereby circumnavigating phone manufacturers. It is likely to be other non payment applications that will first result in wide scale use of NFC technology. It will be the compatibility with these non payment NFC applications that will determine and pave the road to the success of NFC payments. It is also shown that the availability of broadband on the mobile device is improving rapidly and that this is likely to create further opportunities for the development of mobile payments in the area of intersection of three core technologies: Internet, SMS and NFC. Finally two popular technologies for remote payment applications are examined; SMS and USSD and note that SMS technology is not inherently suited for the payments function (except for payment initiation) and that USSD while less user friendly has seen some reasonable use in payment pilots around the world.

4.1 Developments in contactless technology Contactless technology has been around for a while and it is used regularly in our daily lives. For example, most office access cards use contactless technology as do retail security gates that release a sound if an item is passed through them with the security tag still intact. Contactless technology can be divided into two categories: —

Vicinity, this technology offers a maximum read distance of 1 to 1.5 meters (3 to 5 feet). Examples of vicinity contactless are access control where you are not required to take your access device out of your wallet or bag and logistics where scanning can be done at a greater distance without the need for containers to be unpacked.

—

Proximity, this technology has a much smaller read distance, usually about 7.5 centimetres (3 inches) in most instances. The small read distance leads this technology to be used in many day to day applications such as the office access cards.

Radio frequency identification or RFID is a well known application of contactless using both vicinity and proximity technology. RFID is used extensively in areas such as product tracking, passports, animal identification, libraries, etc. However, the restriction of RFID has always been that it is a one way communication standard; from the code to the reader.


33 - Recent technical developments and implications

This restriction was resolved in the 1990’s by Philips and Sony. The two companies jointly developed a standard for two way contactless communication. The standard was called Near Field Communication or NFC and while this standard was available throughout the 1990’s it was only acknowledged by the ISO organisation in 2003 and from that moment became an open standard for two way contactless communications. Along with the development of two way contactless communication there have also been recent advances in the speed with which the data is transferred and the security of the transferred data through encryption. The critical developments of two way communications, faster data transfer speed and increased data security have made contactless technology ripe for use in payments. These developments have been the catalyst for an explosive growth in the use of contactless technology for payments with the volume of contactless cards growing to hundreds of millions helped in part by strong marketing pushes from the major card schemes. However, because of the interactive communication opportunities offered by the two way capabilities of NFC, this technology only offers its full potential when used with an interactive device such as a mobile phone. NFC is often compared to Bluetooth. Without going into too much of the technical details, it can be said that NFC is a more advanced and preferable technology for payments than Bluetooth as it offers faster connection between devices, less chance of interference, has a shorter range than that makes it more secure for use in crowded places, and finally NFC can be used even when the enclosing device has a depleted battery or is switched off while Bluetooth cannot be used in such conditions. The recent developments in contactless technology culminating in the registration of NFC as an open ISO standard have been the catalyst for the recent renewed interest in NFC based point of sale payments using a mobile device.

4.2

(Non-)availability of NFC enabled phones

The market for NFC enabled phones is still in an early stage of development. At the time of writing of this report there is still only one NFC enabled phone commercially available on the market: the Nokia 6212. Nokia expects the 6212 to be available at the start of 2010. Sagem released the Sagem My 700X NFC in 2007, but demand for this mobile phone was disappointing. Samsung and Philips presented an NFC enabled phone at the GSM 2006 conference in Barcelona, called Samsung X700 NFC, but this phone is still not commercially available7. Other NFC phones have been created8 but only for NFC trials and are not yet commercially available9. Several of the mobile phone manufacturers are currently providing prototype

7

http://mobilementalism.com/2006/02/11/samsung-and-philips-to-show-off-protoype-nfc-phone-at-3gsm/


Mobile payments 2010 - 34

NFC-enabled mobile phones for trials by mobile operators with plans to provide commercial versions of the phones in 200910. In early 2007, GSMA already indicated that ‘the design of new mobile handsets for NFC mobile devices is a key point that needs to be considered.11 The diffusion of NFC-enabled phones has been subject of many speculations. Many established market research firms like ABI Research and Juniper have marketed reports predicting a rapid uptake in shipment of NFC-phones. This rapid uptake has yet to materialise.

60

Pre dicte d % of phones shipped in 2011 be ing NFC-e nabled 50 40 30 20 10

04-2009

01-2009

10-2008

07-2008

04-2008

01-2008

10-2007

07-2007

04-2007

01-2007

10-2006

07-2006

0

Date of prediction

Figure 4-1: NFC enabled phones are also proving to be quite elusive.

This, however, may quickly change as technology firms Innovision and NXP are pooling their NFC expertise to provide a combined offering to potential customers looking to integrate NFC into handsets. According to the participants, the deal could well make sure that NFC is being built into mass market handsets for under USD 1.

4.3 Circumventing NFC-phones While waiting for NFC handsets to become available, NFC-stickers may be a stopgap solution. An NFC-sticker is a sticker equipped with advanced radio frequency technology (RFID). It transmits card information to the merchant's terminal via NFC technology. In order to pay using these stickers, consumers need to hold their mobile device close to a reader.

8

www.nfc-research.at/index.php?id=45

9

www.zdnetasia.com/news/communications/0,39044192,62031790,00.htm

10

www.gsmworld.com/documents/pbm/gsma_pbm_white_paper_11_2007.pdf

11

www.gsmworld.com/documents/nfc_services_0207.pdf


35 - Recent technical developments and implications

MasterCard, that offers the PayPas service, sees this approach as a bridge to fully integrated contactless m-payments services using NFC technology. This sticker however is not strictly related to mobile payment: the consumer can decide to put the sticker on his mobile phone, but also on his wallet or credit card. US-based mobile commerce company Mobile Candy Dish for instance, has decided it cannot afford to wait for NFC handsets to become available. Already in Q2 2008, it announced to make use of NFC-enabled stickers.12 In a separate move, Turkish Garanti Bank and American Citi bank have introduced their own plans for mobile payments, circumventing mobile network operators and mobile phone manufacturers altogether. Turkish Garanti Bank, which launched Europe’s largest contactless payment card trial with its Bonus PayPass credit card, was among the first banks to offer its consumers a small version of the card they can stick onto the back of their mobile telephones. This allows the customer to use their phones to make low-value purchases with PayPass – without the need for handsets that support NFC. The sticker cuts telcos and mobile phone manufacturers out of the loop, making the bank the only institution to handle mobile payment transactions. The stickers measure about one-quarter the size of a standard bank credit or debit card.

4.4 Non-payment use of NFC While NFC technology gets a lot of press in relation to payments it can also be used in a number on other non-payment applications. The success of the payments application of NFC will be dependent on the degree of success that these non payment applications achieve in the market and the degree of compatibility with these non payment applications.

Listed below are the key non payment applications of NFC: —

Mobile ticketing: the NFC device acts as an access token, for example to access public transport systems

Loyalty application: the NFC device is used to identify the user and receive updates regarding loyalty status (points), for example at a supermarket or hotel

Smart advertisement application: the NFC device is used for example to access information from a smart poster at a bus stop

Physical access: the two way interactive capabilities of NFC allow the user to authenticate themselves for example to control access to home or office

Logical access: the NFC device is used to authenticate for access to electronic data, for example to control access to a computer network

12

Mobile Payments Update vol. 2; Issue 16; The Paypers/Telecompaper


Mobile payments 2010 - 36

Health care application: the NFC device is used for example to store medical information for use in emergencies

Digital rights management: the NFC device is used for example to allow controlled exchange of purchased music or multi-media data

Automotive application: the NFC device is used for example to control access to a car

Bluetooth pairing: in the future pairing of Bluetooth 2.1 devices with NFC support will be as easy as bringing them close together and accepting the pairing. The process of activating Bluetooth on both sides, searching, waiting, pairing and authorization will be replaced by a simple ‘touch’ of the mobile phones.

It is the first three applications in this list; mobile ticketing, loyalty and smart advertisement that are believed to provide the most compatibility with payments.

4.5 NFC Security issues From a users’ perspective, the perceived lack of security of NFC technology is an inhibitor for adoption. In order to distinguish fact from fiction, some of the security issues for NFCbased mobile payments are described in this section. Attacks on the NFC payment process can be divided in three categories – parallel to the NFC process:

4.5.1

Attacking the reader

Attacking the reader means modifying someone’s mobile telephone and the NFC reader in it. This implies that the fraudster should have access to the mobile phone for a certain period of time. As the number of applications for the NFC-phone is still quite limited, this method is not deemed to be rewarding. Also, it is easier and probably more rewarding to target a different part of the NFC payment process.

4.5.2

Attacking the tag

In a landmark study of the Fraunhofer Institute SIT, Collin Mulliner13 states that the weakest link in the chain is the passive NFC tag. NFC communication comes in two modes: The passive communication mode: the initiator device (in this case the tag) provides a carrier field and the target device (in this case the phone) answers by modulating the existing field. In this mode, the target device (phone) may draw its operating power from

13

www.mulliner.org/nfc/feed/collin_mulliner_25c3_attacking_nfc_phones.pdf


37 - Recent technical developments and implications

the tag’s electromagnetic field, enabling the NFC-payment to take place, even if the phone’s battery is flat. The active communication mode: both initiator (tag) and target (phone) communicate by alternately generating their own field. Both tag and phone need a power supply. Mulliner found out that especially the passive communication mode is vulnerable to attacks. This is bad news, since the majority of messages exchanged via NFC, are exchanged using passive communication mode. This is because the tags are cheaper and because transactions can take place even if the target device (phone) has no power supply (battery) on its own. But the low price of the tag is not only an advantage: for fraudsters it’s also quite simple to purchase a tag and replace a ‘common’ tag by one of their own. The replaced tag cannot be identified as such by someone who wants to tap his NFC phone on it. Only after tapping, the victim can see what the tag intends to do with the phone. Mulliner gives some examples: A smart poster could include a tag set to deliver a free phone number to a user’s handset. This means, for instance, that when an NFC handset owner interacts with a tag on a movie poster or tourist information map, instead of the tag performing the expected operation it would instead do whatever the fraudster had set it up to do. Mulliner's examples of how this could be exploited included: A tag set to send the browser on a user's handset to a particular website could be replaced with one set to send the user to a different website. A smart poster could include a tag set to deliver a freephone number to a user's handset. This could be replaced with a tag set to deliver a premium rate number belonging to the fraudster instead. A tag set to send a free SMS text containing the latest weather forecast could be replaced with one that instead placed an order for a premium ring tone. Mulliner then took a look at how this all might work in the field, visiting Vienna and Frankfurt to look at both transit ticketing and vending machine applications. In a group of four vending machines, for example, he identified that the NFC tags on machines B, C and D could be replaced with tags that point to vending machine A. Then, whenever anyone made a purchase at any of those machines, the item bought would be dispensed from machine A — straight into the waiting hands of the fraudster. Mulliner also looked at the potential vulnerabiities of the existing SMS-based NFC ticketing system on Vienna's Wiener Linien and OBB's Handy-Ticket and also at RMV's Handy Ticket system in Frankfurt. Mulliner then presented his findings to Nokia who, he says, took them seriously and responded promptly. The result, he revealed at 253C, is that many of the issues uncovered during the initial testing have now been fixed — but there are still issues. "The Nokia 6212


Mobile payments 2010 - 38

Classic is not vulnerable to most of the bugs I found in the Nokia 6131 NFC," Mulliner told the audience, "but URL spoofing is still possible." Relay attacks One of the most mis-understood safety aspects of NFC technology is the relatively short communication distance between the sender and the receiver. Because the radio frequency field has a very low range (typically less than 10 cm), it is oftentimes thought that the attacker must be within this range too. This however is not the case. Using a so-called relay attack, attacks can be executed from a very long distance. This however requires quite some skills and is not easy to accomplish, but it is not impossible, as a Cambridge University survey described below shows14. An attack which effectively allows an attacker to ‘borrow’ the victim’s card for a short period without requiring physical access to the victim’s card is possible. As a result the legitimate owner will remain unaware of the attack. University of Cambridge has shown that their hardware can successfully execute a relay attack against an ISO 14443A contactless smart card, up to a distance of 50 m. Simply relaying information between the card and reader over a longer distance does not require the same technical resources from the attacker as hardware tampering or cryptanalysis. This attack is therefore a feasible method for circumventing current security protocols with little effort. Application-level measures fail to protect against relay attacks. The basic relay attack system is built using two devices, which are called the ghost and the leech. The ghost is a device which fakes a card to the reader, and the leech is a device which fakes a reader to the card as shown in the diagram below.

Figure 4-2: Schematic representation of a relay attack system

The main idea of the ghost and the leech is to create a bidirectional communication channel between the genuine reader and the victim card. The channel passes through the leech and the ghost and provides transparent communication between the reader and the card at a range that is much greater than the nominal system range.

14

A practical relay attack on ISO 14443 proximity cards by Gerhard Hancke, University of Cambridge, UK www.cl.cam.ac.uk/~gh275/relay.pdf


39 - Recent technical developments and implications

The typical communication scenario starts with a message that the reader sends to the ghost, which acts as a regular card. The ghost receives the message, sends the message to the leech using a fast digital communication channel and minimum delay, without any data manipulation. The leech receives the message, fakes the real reader and transmits the message to the real card. In the opposite direction (tag to reader) the communication scenario is reversed. Using this technique gives the ability to create a relay, or repeater between a reader and a card. The relay is orthogonal to any higher level security protocols such as those defined in the ISO 7816.4 standard [ISO95]. Furthermore, using the two devices (the ghost and the leech) allows the distance between the reader and the real card to be practically unlimited. The attack described here breaks the assumption that the reader is communicating with a card that is physically close. Using the relay attack, the attacker causes the reader to (unknowingly) communicate with a genuine card which is far away. This opens several possible threats. A typical attack is to charge someone else's credit card or electronic wallet for a purchase. To mount such an attack, one could place a leech device close to the victim smartcard (e.g., slip the leech into the victim's handbag), and then present the ghost to the reader at payment time. One could also open a secure door using a relay attack on someone else's contactless key15 device.

Eavesdropping For making an NFC-based mobile payment, a radio frequency signal is sent from sender to recipient. This signal can be illegally intercepted by a third party and this act is called ‘eavesdropping’. This third party then becomes the recipient or a co-recipient. Because of the short range of this communication mode, this third party needs to be physically near to the transaction point if he does not want to rely on complicated technology involving ghosts and leeches, as described in the relay attack section. The distance from which an attacker is able to eaves drop the RF signal depends on a large number of parameters: the quality of the attacker’s equipment, location, power of signal emitted by the NFC device and environmental noise. Eavesdropping is also impacted by the communication mode. RFID and NFC communication encompasses the communication between two tags. One is a sender and one a receiver. The sender node creates a radio frequency field which the receiver node receives. An RFID tag which is capable of creating a radio frequency field by itself is called an active device. A tag which is only capable of receiving an RF-field is called a passive device. A sender node must be an active device, otherwise it cannot initiate communication with a receiver. A receiver can either be active or passive. In active mode, the modulation is stronger, especially at low bandwidths, which

15

http://eprint.iacr.org/2005/052.pdf; Picking Virtual Pockets using Relay Attacks on Contactless Smartcard Systems; Ziv Kfir and Avishai Wool,Tel Aviv University


Mobile payments 2010 - 40

makes the communication more vulnerable to eavesdropping. A passive device, which does not generate its own RF field is much harder to eavesdrop than an active device. Transferring data through a secure channel, which is a way of transferring data that is resistant to interception and tampering, can mitigate eaves dropping.

Data destruction Data destruction can be executed by disturbing the signal that the NFC device(s) send(s). Destruction is relatively easy to realise with NFC. It is possible to disturb the signal by jamming certain radio frequencies. Operating such equipment only requires basic electronic engineering skills. There is no benefit for the disturber however besides the fact that the transaction is made impossible Up till now, there is no clearly defined way to prevent such an attack. Mechanisms that prevent collision of different RFID signals cannot disable such an attack. The employment of security cameras and personnel may detect an attack in progress, as jammer equipment cannot be easily concealed within a bag or jacket. Also, RFID readers may contain jammer sensors triggering an alarm when a jammer is detected, although this is a rather expensive option.

Man in the middle attack When two parties A and B want to communicate with each other, a third party might trick A and B in a three party conversation as shown in the diagram below.

Figure 4-3: Schematic representation of a man-in-the-middle attack


41 - Recent technical developments and implications

Assuming party A uses active mode and B uses passive mode, A generates an RF field and sends data to B. If unwanted party C is physically near enough, C can eavesdrop the data sent by A. Additionally, C has to disturb the transmission of A to B, to make sure B does not receive the data sent by A. Although disturbing transmission is possible, C is vulnerable to discovery since A might detect disturbance and abandon the transmission, which makes C’s attempts futile. In case A does not detect the disturbance, transmission to B will continue, albeit disturbed. In order to make a successful attempt, C has to make sure that party B receives C’s signal, and not A’s. So C has to create a second RF field. This causes two RF fields to be active simultaneously. Aligning two RF fields is possible in practice albeit it is very hard. If the attacker C manages to do so it is possible to send a readable message to B and the attack might succeed. If the two fields are not perfectly aligned, recipient B will receive an unreadable and not understandable message, which renders the attack futile. All in all, this attack is very difficult to execute and vulnerable to early stage discovery by initiating party A.

Data insertion Data insertion means that the attacker inserts messages into the data exchange between two devices. This is only possible, in case the answering device needs a very long time to answer. The attacker could then send his data earlier than the valid receiver. The insertion will be successful, only, if the inserted data can be transmitted, before the original device starts with the answer. If both data streams overlap, the data will be corrupted.

4.6 SMS as a technology for mobile payments Short Message Service (SMS) is a communication protocol allowing for the interchange of short text messages between mobile telephony devices. Most SMS messages are mobile-tomobile text messages, though the standard supports other types of broadcast messaging as well, e.g. mobile to landline, mobile to computer. SMS has three characteristics that are important to consider in its use for a payments application, these are: —

Store-and-forward, this means that the text message is sent from the sender phone to an operator. When the intended recipient’s phone is available for this message to be received, the operator sends this message through to the recipient. Oftentimes, there is a maximum to the time that an operator holds a message for delivery in case the recipient’s phone is shut off, the battery is flat or the phone has no reach.

Lack of encryption, SMS is sent as clear text only.

Lack of proof of delivery, functionally, this omission can be circumnavigated; however a proof of delivery is not part of the SMS protocol as such. It should be mentioned that most SMS-based mobile payment methods do provide a proof of delivery, alhtough this


Mobile payments 2010 - 42

increases the costs of a single transaction and is not economical if the transferred amounts are small. The combination of these three factors makes SMS unsuitable for use in many payment applications. Where it can and is used extensively however is simply to transfer initiation messages for a payments process.

4.7 SMS security issues The service level security is important for secure m-commerce applications, especially those involving monetary transactions. Short Message Service is a most popular data service offered by mobile network operators and most widely used for mobile payments. By using SMS to initiate or authorize payments the SMS can be then used as the unit of currency itself. The device can exchange data via a short message service centre (SMSC) by sending and receiving standard SMS messages identified by the International Mobile Subscriber Identity (IMSI) which an attacker cannot forge without breaking GSM/UMTS security. However protection ends in the radio interface. There is no end-to-end security, the network operator and its infrastructure must be trusted for transactions16.

A secure mobile payment system should have the following security properties17: —

Confidentiality: The confidential information must be secured from an unauthorized person, process or device. For SMS the confidential info is stored at the merchant’s end of the equation. The security of the transaction is as secure as the security of the merchant.

Authentication: ensures parties with access to a transaction are not impostors and are trusted. For post-billed SMS services, this is an extremely weak point. If a mobile device is stolen, the thief can abuse this as much as they like, until the account is blocked. The person initiating the transaction does not need to be the person paying for it. In the UK alone, 700,000 mobile phones are stolen each year18

16

Integrity: the information and systems have not been altered or corrupted by outside parties.

Saleem Kadhiwal & Muhammad Anwar Usman Shaheed Zulfiquar – Ali Bhutto Insitute of Science and Technology, Karachi – analysis of mobile payment security measures and different standards. – Computer Fraud & Security – june 2007

17

Secure M-commerce Scarlet Schwiderski – Grosche; Heiko Knospe; Information Security Group, University of London

18

BBC: http://news.bbc.co.uk/2/hi/uk_news/1966247.stm


43 - Recent technical developments and implications

Corrupting SMS messages is possible, albeit not very frequently occurring. The data is not sent encrypted, making eavesdropping and data corruption easier. —

Authorization: Verify that the user is allowed to make the requested transaction. Post-billing SMS, authorization is an issue; with PIN-based SMS-payments systems, security is considerably better on this topic.

Availability: system must be accessible for authorized users at any time. For SMS based payment systems this aspect is well covered as long as you have reception on your mobile phone, and the battery is not flat, one can pay by SMS. For P2P payments, this is different: the mobile device of the receiver has to meet the two criteria mentioned before, plus the receiver must have the mobile device switched on for the transaction to be completed (store-and-forward principle)

Non-repudiation: ensures that the user must not deny that (s)he has performed a transaction and must provide proof if such a situation occurs There is no ‘proof of delivery’ incorporated in the SMS protocol, however this can be functionally solved, but this requires extra costs.

4.8 USSD as a technology for mobile payments USSD stands for Unstructured Supplementary Service Data. It is a capability of all modern GSM phones. It is generally associated with real-time or instant messaging type phone services. USSD is a standard for transmitting information over GSM signalling channels. It is mostly used as a method to query the available balance and other similar information in pre-paid GSM services. The function that is triggered when sending USSD is network dependent and depends on what kind of services the operator has made available. Some operators have not activated this possibility. The USSD bearer is accessed by calling a number that starts with the asterisk or gate (or hash) characters ‘*’ or ‘#’ and then a combination of numerals, asterisks and finally the gate or hash character ‘#’, for instance #09001234# There is no store-and-forward capability that is typical of ‘normal’ short messages. Response times for interactive USSD based services are generally quicker than those used for SMS. Also, the sender of a message can be absolutely sure that they are talking to their own operator. As a consequence, communication via USSD is in sessions instead of in discrete intervals. USSD is typically used as a ‘trigger’ to invoke independent calling services which don't require the overhead and additional usage costs of a short message service centre (a network element in the mobile telephone network which delivers SMS messages), such as a call-back service (e.g. cheaper phone charges while roaming), or interactive menu service (e.g. stock quotes, sporting results).


Mobile payments 2010 - 44

USSD is the base of some payment methods such as SharEpay in South Africa, Mobipay in Spain, Paysa in India, mPay in Poland and SEP in Bulgaria.

4.9 Increased broadband and the merging of channels High speed broadband internet is increasingly available on mobile devices. In parallel, mobile devices are becoming increasingly like laptop computers in terms of the functionality they offer. The continuation of these two trends implies that in the near future, at least in terms of functionality, there will be little difference between our mobile devices and our laptop computers. The only yet critically important differences will continue to be the size of input (by definition small for a mobile device) and the size of the display (again smaller for a mobile device). It is widely believed that the emerging convergence among Internet and mobile technologies will lead to the emergence of a wireless broadband Internet platform that will allow ubiquitous access and a wide range of new value-added services, many of which would be settled via payment systems based on the platform. These trends will provide a positive impetus to the development of mobile payments. It is also likely that new payment methods will be developed that leverage the capabilities of three payment related technologies on the mobile device: Internet, SMS and NFC. Future developments could lead to real time online banking with your mobile phone, which would be an enabler for Point of Sale payments.

4.10 Emerging ecosystem for Point of Sale NFC mobile payments 4.10.1 Stakeholders First the key stakeholders in a Point of Sale NFC mobile payment ecosystem are defined: —

Chip manufacturer: creates the smart card chip on which the mobile payment application or Secure Element can reside.

Handset manufacturer: produces mobile devices that support the use of Secure Elements.

Secure Element Issuer: personalizes the chip with the Secure Element.

Service provider: offers services for end users, for example payments, authentication etc.

Trusted Services Manager: enables the service provider to use the Secure Element.

Mobile Network Operators: provides the infrastructure for communication in remote applications.


45 - Recent technical developments and implications

End users: uses the services offered by service providers with Secure Element enabled mobile devices.

It should be noted that in the market today both financial institutions and mobile network operators play the roles of Secure Element issuers, service providers and trusted services manager.

4.10.2 Considerations The key debate around ecosystems for Point of Sale NFC payments rests around two core questions: —

Where should the Secure Element for the payment application be located?

Which stakeholder fulfils the role of the Trusted Services Manager for management of the payment application and associated services?

There are three main options for the location of the Secure Element: —

On the universal integrated circuit card (or UICC), typically the smartcard that also contains the phone’s subscriber identity module or SIM. This is generally the mobile network operator preferred option for the location of the Secure Element as mobile network operators have control of the UICC.

On a separate chip or smart card in the phone. This is generally the financial institution preferred option for the location of the Secure Element as it gives the financial institutions an option to be mobile network operator independent.

Embedding the secure element in the phone itself. This is generally the handset manufacturer preferred option for the location of the Secure Element as it increases the features and competitiveness of a handset and also allows the handset manufacturer to continue to target the end consumer independent of the mobile network operators.

There are four main options for the fulfillment of the Trusted Services Manager, as listed below and depicted later in a GSMA provided diagram. —

Mobile Network Operator centric model: Mobile network operator fulfils the role of the Trusted Services Manager.

Financial institution centric model: financial institution fulfils the role of the Trusted Services Manager.

Collaborative model: financial institution and mobile network operator collaborate to fulfil the role of the Trusted Services Manager.

Independent entity model: An independent third party fulfils the role of the Trusted Services Manager.


Mobile payments 2010 - 46

Figure 4-4: The four roles for the Trusted Services Manager (TMS)

4.10.3 Proposed ecosystem from the GSMA The main components of the GSMA proposed ecosystem are: —

Secure Element located on the UICC

Mobile network operators will use and supply the UICC, banks will pay the mobile network operator for access

Banks and retailers will control the applications resident on the UICC and the financial data pertaining to each specific customer through the Trusted Services Manager

The diagram below provides an overview of the ecosystem proposed by the GSMA.


47 - Recent technical developments and implications

Figure 4-5: Overview of the ecosystem proposed by the GSMA

The advantages for use of the UICC to locate the Secure Element in the GSMA model are: —

Portable and transferable across devices and networks. Customers can easily transfer their applications and rights from one NFC enabled mobile device to another.

Global penetration - The UICC has wide scale global deployment potential – hence it is cost effective to use the UICC as a location for the Secure Element rather than to develop, implement and deploy a new alternative.

Dynamic remote over the air management. Mobile network operators already operate secure remote UICC management systems and processes (Over the Air). These can easily be leveraged to manage the whole life cycle of mobile NFC services. Furthermore, services loaded onto the UICC can be immediately blocked, activated or suspended.

Longer life cycle typically then devices. The UICC has a longer lifecycle than a mobile device - hence it is more suitable to house the NFC applications on it rather than on the mobile device. This permits the customer to easily transfer and use their mobile NFC services over time.

Standardised: UICC Security is based on global, well-established standards (such as ETSI-SCP, 3GPP, Global Platform) covering application storage, OTA communication, privacy and the entire life cycle management.

Consistent approach, by deploying mobile NFC applications in the UICC, the mobile network operator can leverage existing capabilities to provide OTA management and single point of contact device management services to customers.

Battery independent: The UICC mobile solution also allows NFC services to work even when the battery is off.


Mobile payments 2010 - 48

Key to the GSMA model is also the role of the Trusted Services Manager. The Trusted Services Manager manages the download and life cycle management of the mobile NFC application on behalf of the financial institutions and provides the single point of contact for the financial institutions to access their customer base through the mobile network operators. The key risks of the GSMA proposed ecosystem are: —

Non wide scale acceptance by the financial institutions because of disintermediation from the consumer as depicted in the diagram provided by the GSMA below:

Figure 4-6: Schematic representation of des-intermediation between issuing bank and consumers

It is a closed model restricted to the reach of the mobile network operator and the agreements signed by financial institutions with a specific mobile network operator.

It does not provide a widely accepted or easy to use solution for the update of the Secure Element on the UICC. Currently the update of an application on the Secure Element requires a complete over-write of all existing data on the Secure Element. As a comparison for Personal Computers this is equivalent to having to perform a BIOS format and re-write when wanting to upgrade a single application.

Strategies to overcome these limitations will be discussed in future versions of this report.

4.11 Conclusion The advantages and disadvantages as well as contexts of the four technologies are summarized in the table below. Technology

Advantage

Disadvantage

Use

Examples

NFC

Quick and easy

Lack of availability

POS only

Osaifu Keitai

of NFC enabled

(Japan), Visa

phones

PayWave (Guatemala)


49 - Recent technical developments and implications

Technology

Advantage

Disadvantage

Use

Examples

SMS

Available and

Expensive, recipient

Banking, Remittance

Rabo SMS betalen

understandable to

not always available

(Netherlands),

every cell phone user USSD

Internet

POS, Banking

Available to every

Not user friendly

cell phone user

interface

Connects to user

Most phone users

Banking, POS (if real

experience,

worldwide are not

time), Remittance

able to use it Table 4-1: Mobile technology advantages and disadvantages

mPay (Poland), MobiPay (Spain)


5

Lessons, trends and issues from analysis of global pilots and initiatives

5.1 Mobile payments The mobile payment market is very fragmented with many different payment services and payment technologies. Mobile payment services include mobile parking, mobile ticketing, mobile Point of Sales (POS), and mobile remittance. The mobile payment services are based on different techniques like Near Field Communication (NFC), SMS or mobile internet.

Figure 5-1: Geographical dispersion of mobile payment initiatives

The mobile payment services offered differ per region. However, since the last publication of the report in November 2008 we have seen a strong increase in the number of mobile remittance services across the world and especially in the USA. In developing countries, which are underserved by the banking industry, the focus remains on mobile money transfer via SMS. In other regions the focus is on POS and mobile ticketing with the notable exception of the USA and Latin America where we see a strong focus on mobile remittance. In some Asian countries there is a low internet penetration, a comparatively high mobile adoption and a push by the operators to offer mobile payments like mobile POS and mobile ticketing. In Western Europe the situation is different again as


51 - Lessons, trends and issues from analysis of global pilots and initiatives

the region is generally not under-banked and has a high internet penetration but the uptake of mobile internet is relatively low when compared to Japan.

Figure 5-2: Geographical dispersion of techniques used

In Western Europe mobile payments are mainly offered using SMS, but currently many NFC based mobile payment services are being tested. Of the listed initiatives in chapter 7, it shows that both SMS and NFC are the most used technologies however the number of WAP/Internet pilots has gradually increased over the last 6 months.

Many mobile payment initiatives are still in a pilot stage. This is especially the case for NFC mobile payment methods. The next section provides more details of the examples listed below. Region

Service

Technology

Pilot or

Examples

commercially available Europe

Mobile parking

Mobile ticketing

NFC

Pilot

Payter (Netherlands)

SMS

Available

Paybox (Austria)

NFC

Pilot

Mobile ticketing London

SMS

Available

Underground (UK),


Mobile payments 2010 - 52

Region

Service

Technology

Pilot or

Examples

commercially available Touch&Travel (Germany), Beep (Netherlands), Paybox (Austria) NFC

Pilot

Rabo Mobiel (Netherlands),

SMS

Available

Paybox (Austria)

Mobile remittance

SMS

Available

Luup (Gemany, Norway)

Mobile remittance

SMS

Available

Mobipay (Spain)

Mobile remittance

SMS &

Available

Obopay (US)

Mobile POS

North America Asia

Africa

Web browser Mobile POS

NFC

Available

NTT Docomo’s Osaifu-Keitai

Mobile ticketing

NFC

Available

(Japan)

Mobile remittance

SMS

Available

G-Cash (Philippines)

Mobile remittance

SMS

Available

Wizzit (South Africa), M-Pesa (Kenya)

Table 5-1: Geographical dispersion of mobile payment services, technologies with examples

5.2 Mobile parking payments For mobile parking payments two technologies are being used: NFC and SMS. Paybox in Austria offers SMS based mobile parking tickets while NFC based mobile payments are being offered by Payter in the Netherlands. Paybox Austria enables consumers to pay for parking with an SMS sent from their mobile phone. In the Netherlands, the company Payter offers mobile payments by NFC in Rotterdam. Consumers can pay for parking by holding their mobile phone over a NFC reader upon entering and upon leaving the garage.

5.3 Mobile ticketing for public transport or events In Western Europe many pilots have been launched to test NFC in relation to public transport. Some NFC pilots only focus on transport (Touch&Travel in Germany), while other NFC pilots also include POS payments in shops (the O2 wallet in the London Underground mobile ticketing trial in the UK). SMS is also used as a technology to pay for public transport tickets or for buying tickets to events. Several SMS-based services like are already commercially available.


53 - Lessons, trends and issues from analysis of global pilots and initiatives

Touch&Travel is a NFC pilot by Deutsche Bahn and Vodafone to test a new e-ticketing system that simplifies rail travel. 200 test users have the opportunity to try out a service that is scheduled to be introduced nationwide for all rail passengers in 2010. The Touch&Travel system turns mobile phones into tickets as passengers use their mobile phones to check-in when they get on the train and then to check-out again when they reach their destination. All station platforms and bus stops will have 'touch points' installed. The length of the journey and the ticket price are calculated at the end of the journey, and the customer receives a regular statement of journeys made. At this moment customers get a monthly statement with all travel data and an attached invoice. Therefore, strictly speaking, Touch&Travel is not an example of a mobile payment initiative according to the definition used in this report. In the UK, Transport for London, TranSys, Barclaycard, Visa Europe, Nokia and AEG started a NFC pilot last November called London Underground mobile ticketing. Each participant of the trial received a Nokia 6131 NFC-enabled handset. All 500 participants have an O2 wallet, which consists of an Oyster card for paying public transport tickets and a Barclay’s card for Point of Sale payments. Customers can top up their Oyster by touching their handset on Oyster ticket machines in tube stations or at Oyster ticket stops. Just like a normal wallet, the handset will hold various everyday cards, in this case Oyster and Barclaycard in virtual form and with NFC functionality. Participants will be able to test travelling on London’s public transport system but also making purchases in retail outlets. Austrian railway operator OBB has teamed up with Paybox Austria, Mobilkom Austria and ONE to offer customers tickets using their mobile phones. The OBB mobile ticket can be purchased via SMS or through the Vodafone live! portal. Mobilkom and ONE contract customers can pay for their tickets through their monthly phone bills.

5.4 Mobile POS Paybox (Austria) offers mobile POS payments (e.g. vending machines or petrol station). Other services that are available through Paybox include mobile parking, ticketing for public transport, tickets for (music) events, toll ticketing, and remittance (money transfer). The services users have two payment options: using a Paybox account (direct debit on the customer’s account) or via the mobile phone bill (only for Mobilkom and ONE postpaid customers). The Austrian mobile operators Mobilkom Austria and ONE are the owners of Paybox Austria. Mobilkom has been leveraging Paybox for 3rd party content and mobile services since 2001. As per mid 2009, Paybox has over 5 million customers and is accepted at 20,000 locations. All post-paid subscribers are automatically enabled for the service. The Rabobank (Netherlands) is the first Western European bank that has launched its own mobile virtual network operator (MVNO) service, Rabo Mobiel (2006). In 2007, Rabo Mobiel conducted an NFC trial of mobile contactless payments and is ran 19 different trials of various sizes, including payments in a supermarket (C1000), a school, a


Mobile payments 2010 - 54

fast food restaurant, vending machines, and cinema ticketing. Rabobank’s goal is to replace some of today’s cash and debit card payments with one device that could provide all this in a compact package. In the Netherlands the NFC Pilot ‘Pay with your mobile phone at C1000’ was conducted in 2007 and 2008. During 6 months, one hundred customers of the C1000 supermarket in the small town of Molenaarsgraaf could pay for their shopping by means of their mobile phone. Customers could pay for their shopping by simply holding a mobile next to a reader at the checkout. They then entered a PIN code as usual into the POS reader and the transaction was complete. In addition to the possibility to pay with the mobile phone, bottle deposit receipts could also be saved on the phone. The deposit could be deducted at the checkout, credited to a Rabobank account, or donated to charity. The pilot was using a payment solution that utilises the existing PIN system in which the debit card had been replaced by a mobile phone. The pilot was an initiative of RFID Platform Nederland, LogicaCMG, Schuitema (C1000), Rabobank, KPN and NXP Semiconductors. The initiators want to use the pilot to achieve an NFC technology breakthrough. In Japan, mobile payments are very advanced. The rapid development of mobile proximity payments in the Japanese market can be attributed to NTT DoCoMo's role in developing the partnerships and a roadmap necessary to create a workable technical solution and a business model. In October 2003, NTT DoCoMo formed a joint venture with Sony called FeliCa Networks to develop Sony's contactless card technology, called FeliCa, for use in mobile phones. Through the joint venture, NTT DoCoMo has integrated FeliCa contactless technology into mobile phones, enabling owners to access multiple applications which are currently available through separate cards. Examples of the separate cards are: —

Edy: Edy is a pre-paid electronic money scheme launched in October 2001 by Bitwallet, a joint venture between NTT DoCoMo, Sony Corporation, Sony Finance International, The Japan Research Institute, Toyota Motor Corporation, Denso Corporation, DDI Corporation, Sanwa Bank, and the Bank of Tokyo-Mitsubishi. At the end of March 2005, Bitwallet reported that it had issued 9.2 million cards in total, 5 percent of which were enabled for mobile purchases. It also stated that the Edy card was usable in 20,000 member shops and generates 7.1 million transactions per month.

Suica: In July 2005, NTT DoCoMo and East Japan Railway Company agreed to jointly promote JR East's Suica and e-money service. The Suica card is a pre-paid ticket that can also be used in some shops to make purchases. Services available to Suica card users were made available on FeliCa enabled handsets from end January 2006. Currently 500,000 people use the Suica system.

QUICpay: In July 2004, JCB, the international payment brand, AEON Credit Service, the credit card issuer, and NTT DoCoMo jointly announced QUICpay payment solution for cards with contactless chips. QUICpay can also be used by FeliCa enabled handsets. Consumers make purchases by waving their handsets across payment terminals, with the purchase value appearing on the customer's credit card.


55 - Lessons, trends and issues from analysis of global pilots and initiatives

The FeliCa chip installed within the mobile handset comprises a predefined ‘common area' and ‘free area' for storing applications. The common area has been designed for services that require high security such as payment and ticketing, and is managed by FeliCa Networks. For services to be enabled in this area the service provider needs to make an application to FeliCa Networks, who in turn allocates space on the FeliCa chip for the application. The `free area' is for applications that do not require a high level of security and an application to FeliCa Networks or to NTT DoCoMo is not necessary. NTT DoComo invested a vast sum in promoting mobile payments. They rolled out their own proprietary point of sales infrastructure and even purchased a bank. In 2007, 28.6% of Osaifu Keitai compatible mobile handset owners are using the Osaifu Keitai function.

5.5 Mobile money transfer: remittance Around the globe there are numerous initiatives that enable individuals to transfer money to each other via their mobile phones. Mostly, the transfer is conducted by SMS. Obopay (US) is a peer-to-peer mobile payment company enabling mobile phone users to send and receive money through their phones via a mobile web browser or SMS. Obopay charges a fee of USD 0.10 for sending money and a 2.5 percent charge for adding money from a debit or credit card, while linking to a bank account is free of charge. Sending money from the mobile phone can be done through SMS or mobile internet. According to Obopay, the service helps mobile operators drive increased messaging and data traffic, attract new subscribers, and offer an innovative, differentiated service to customers. In 2009, Nokia invested in Obopay and began leveraging the Obopay platform for the Nokia Money service that offers financial services to mobile phone users. Safaricom and Vodafone launched M-PESA, a SMS-based payment service targeting the under-banked, pre-paid mobile subscribers in Kenya on a pilot basis in October 2005. The full commercial launch was initiated in March 2007. Unlike mobile transaction schemes which add a new channel to existing banking services, M-PESA is an alternative solution – it is described and understood by the Kenyan regulators as a mobile payments system. The mobile operator, Safaricom, provides the new account holder with a SIM card that enables transactions using an application running in the SIM Tool Kit (STK) environment. Through specific M-PESA agents, customers can carry out m-transactions and m-payments, and also pay cash in and make cash withdrawals. M-PESA’s services are available only to M-PESA account holders and certified agents; it is not linked to the clearing system. M-PESA uses a network of agents. The agents operate a float of M-PESA value plus a cash float at each outlet. Limiting the transaction network to M-PESA account holders and agents allows MPESA to avoid using a clearing system. The rate of early adoption of M-PESA has been very encouraging. Within the first 3 months (March 2007-June 2007) there were 111,000 registrations and 450 active agent outlets. As of mid 2009, M-PESA had 6.5 million subscribers in Kenya conducting 2 million transactions a day.


Mobile payments 2010 - 56

Transferring money to M-PESA customers as well as non-M-PESA persons by means of an SMS is the centrepiece of the system. Only Safaricom subscribers can send M-PESA payments, but the recipient need not be a subscriber or even a bank account holder. A user can have up to KES 50,000 in their M-PESA account, with no minimum balance, and charges are levied on a pay-as-you-go basis. There is no credit facility per se available on M-PESA. The relatively low maximum balance is presumably an attempt at limiting the opportunity for money laundering. The M-PESA functionality also extends to depositing and withdrawing money at registered M-PESA agent outlets, which are typically Safaricom dealers, but may also be other retailers such as petrol stations and supermarkets. In the Philippines, the mobile phone-based remittance system is employed by Smart19 and by Globe Telecom who both allow remitters to transmit money by using their beneficiary’s mobile phones. Many mobile phones in the country are funded by pre-paid cards, which are effectively stored value cards. It is possible to use the money stored on these cards in many stores.

5.6 Lessons about drivers and barriers 5.6.1

Business models

A major driver in the adoption of mobile payment services in general, is the business model that delivers value to all players in the ecosystem. Several different business models are possible, each with uncertain outcomes. Business models can be bank-centric (Rabo Mobiel Netherlands), mobile operator-centric (Paybox by Mobilkom Austria, DoCoMo’s OsaifuKeita), independent service provider centric (Obopay US) or collaborative (Mobipay Spain, M-Pesa Kenya).

Bank centric The bank centric approach to mobile banking has been taking by a number of banks. One example is the Rabobank (Netherlands) that launch transactional mobile banking services in 2003. Finding that barriers like unclear costs and a poor user experience were deterring potential mobile banking users, the bank decided to launch its own mobile virtual network operator (MVNO) service, Rabo Mobiel, in the Netherlands in late 2006. The advantage of this approach is that Rabobank is in charge of the ecosystem. It can fully control the mobile banking offering. It can for instance design the tariffs to encourage the use of mobile banking services.

19

Not discussed in this chapter, for details see chapter 7


57 - Lessons, trends and issues from analysis of global pilots and initiatives

The acquisition of Rabo Mobiel customers is however slow. The Dutch mobile market is very crowded which makes it difficult for any new entrant to reach a large number of mobile phone customers. Another disappointment is the relative low number of active mobile banking users. Only 15-20 percent of the Rabo Mobiel customers access mobile banking at least once every three months. Part of the problem is that many mobile users in the Netherlands — and other Western European countries — have yet to adopt any mobile internet services. Also, in Western European countries, established channels like ATMs, telephone banking, and internet banking meet the needs of most customers in most situations. Urgent banking transactions simply aren’t common enough to persuade a massmarket audience to sign up for and regularly use mobile banking services. These reasons for the slow adoption of mobile banking will also have a negative impact on the adoption of mobile payments.

Mobile-operator centric Mobilkom Austria adopted a mobile-operator centric model which is rather successful in terms of uptake and usage of mobile payment services. The mobile operators control the mobile service value chain and the payment value chain. The Austrian operator has put a lot of money and resources into the mobile payments strategy, including the acquisition of Paybox and the establishment of a bank subsidiary. The initial mobile payment technology of Paybox is based on SMS. SMS is a widely available and well-known mobile service. Recently Mobilkom also introduced Near Field Communication (NFC) as a payment solution for mobile ticketing for public transport. NTT DoCoMo also has an operator centric approach towards mobile banking. In 2007, NTT DoCoMo had about three million mobile wallet users (out of 15 million m-wallet enabled mobile phones) and 1.5 million customers are using NTT DoCoMo’s mobile phone based contactless credit product. The large uptake of NTT DoCoMo’s mobile payment service is caused by a number of drivers. NTT DoCoMo has invested a vast sum in promoting mobile payment and they rolled out their own proprietary POS infrastructure. NTT DoCoMo has a large market share in Japan and can more easily establish a cooperative business model with banks and mobile handset manufacturers. Another element that influences the uptake is country specific: Japan has a high mobile phone penetration that has been outstripping computer penetration for several years, the average mobile user is more likely to be using an advanced mobile network and the up-take of mobile data services is high. Some of these drivers of mobile payments cannot be translated to the Western European market. However, it shows the importance of a major role in the ecosystem and using a technology with a wide user acceptance.

Independent service provider centric Obopay is a peer-to-peer mobile payment company enabling mobile phone users to send and receive money through their phones via a mobile web browser or SMS. In 2009, Nokia invested in Obopay and began leveraging the Obopay platform for the Nokia Money service


Mobile payments 2010 - 58

that offers financial services to mobile phone users. Previously, Obopay partnered with Verizon Wireless to have its mobile payment applications available and partnered with Citibank to offer mobile banking services to Citibank customers.

5.6.1.1

Collaborative

The collaborative model leverages expertise from both telecom and financial sectors and it enables the establishment of a single technology standard for mobile payment services avoiding the fragmentation of multiple technologies and platforms. An example of the collaborative model is M-Pesa in Kenya. This example is about mobile remittance in under– banked, developing countries. This example is very difficult to translate to Western Europe. Offering international remittance is a specific segment on its own with many problems to be solved. Mobile banking businesses in developing countries are mainly successful because the countries are under-banked. Other examples include Payez Mobile in France in which banks, mobile operators and credit card companies joined forces, and the now defunct Mobipay in Spain that was a joint venture by all Spanish mobile operators and 80 percent of the financial institutions.

5.6.2

Remittance

The uptake of international remittance services tends to be driven by growth in the immigrant population worldwide as well as the overall health of the global economy. The United Nations cited that the number of immigrants worldwide is roughly 200 million, or approximately 3 percent of the world’s population and this amount is forecast to reach more than 280 million by 2050. In 2007, the top three inflow remittance countries were India, China and Mexico, which were estimated to have received USD 27 billion, USD 25 billion and USD 17 billion in remittances, respectively. The United States dominates in outflow remittances, sending out USD 42 billion in 2006. This is followed by Saudi Arabia and Switzerland, with outflow remittances of USD 16 billion and USD 14 billion, respectively. Offering mobile remittance services has some potential for countries with immigrants that originate from under-banked countries. Entering the remittance market is not easy. Barriers to enter the international remittance industry are high due to the regulatory requirements and the large undertaking to build out the technology infrastructure. Regulation is challenging due to the complexity in dealing with differing requirements in various countries. Also the challenge is to support money transfer from multiple starting points (such as bank accounts in developed countries) to multiple end points (e.g. mobile phones/mobile wallets in developing countries). In a mobile operator centric business model the mobile operators have to deal with a wide range of financial regulatory concepts, such as Anti Money Laundering (AML) and the Combating Finance of Terrorism regulations. It also includes regulation with regards of the use of agents when dealing with cash-in and cash-out at both ends of the transaction, but also e-money and payment regulation. Collaboration with financial intermediaries or independent service providers with an established international payment infrastructure


59 - Lessons, trends and issues from analysis of global pilots and initiatives

could help banks and mobile operators to make the entrance in the international remittance market. However, offering this service is still only interesting if starting point of the money transfer is in a country with a significant amount of immigrants from underbanked countries.

5.6.3

Technology

The type of technology used is one of the drivers for uptake and usage of mobile payment services. Mobile internet is not yet widely adopted in Western Europe compared to e.g. Japan. It is also unknown what the maximum mobile internet penetration will be in the next five years.

SMS SMS is available on all mobile handsets. It is relatively cheap and easy to use. By offering SMS-based mobile payment services, mobile operators and financial institutions can reach customers who don’t have mobile internet yet. The SMS capabilities can be used for basic functionalities like bank account enquiries or SMS based payments or ticketing. In order to reach as many potential mobile payment customers as possible, it is wise to at least use accepted technologies such as SMS. From the mobile operators’ perspective, SMS-based mobile banking will generate only modest mobile data traffic and revenues.

NFC Near Field Communication (NFC) is the technology of choice to develop proximity transactions between mobile phones and contactless readers. NFC enables multiple contactless applications on mobile phones, and is not restricted to payment or transport. Other NFC based services include mobile ticketing, loyalty and access control services. The NFC business case will be a challenging one for mobile operators. Short-term benefits, in particular from transport and payment applications, may be limited because these transactions don't need mobile networks. However mobile operators have to provide the NFC enabled mobile phones. In order to monetise this enabler role, mobile operators should find ways to generate revenues from application owners, like banks and transport companies. Orange France sees a business case taking shape in the form of fees it could charge banks, transit operators, retailers and other service providers for downloads of the applications to the SIM and renting space on the card. Orange also could earn significant revenue from additional data traffic, such as from monthly downloads of transit passes to the phones. This would however not be attractive to MNOs that charge flat rates for data services. Another problem to be solved with NFC-enabled phones is that NFC is still in its infancy and only one commercial handset (Nokia 6231) is available. Past launches of data services like imode and Vodafone Live! showed that customers need to have a choice of a broad range of mobile phones, otherwise the uptake of the service is limited. Currently, only one NFC-


Mobile payments 2010 - 60

enabled mobile phone is commercially available, and a few mobile phones like (Motorola, Sagem, and NEC) are used in pilots. For banks, mobile payment at the Point of Sale are compelling if it is cheaper, more effective or carries less risk than other non-cash payments. Introducing NFC mobile payments at POS means an additional investment in infrastructure. If mobile phones become a core payment device at POS, mobile operators could ask for a fee for the use of their SIM “real estate�. This would dilute banks revenues on mobile payments at a POS. As mentioned before Orange, sees a business case taking shape in the form of fees it could charge banks, public transport operators, retailers and other service providers. In addition to delivering value to all players of the ecosystem and accepted technologies used, other drivers for uptake of mobile payments are the acceptance by the end users (customers) and the acceptance by merchants. Acceptance by end-users is based on: easy to use service, and the perception that the service is secure. Paying with a mobile phone should add some benefits to end-users and merchants compared to existing payment methods payments. Contactless payment adoption faces the classic chicken and egg problem that any new payment technology faces. On the one hand there needs to be a large base of consumers with contactless payment devices to provide justification for merchants to add the capability to their Point of Sale (POS) systems. On the other hand there have to be sufficient merchants accepting contactless payments before consumers choose to adopt the new payment mechanism. Acceptance by merchants is driven by a large addressable base of customers for the merchants. This means there should be interoperability across different operators and/or banks.

5.7 New opportunities in the Payment Services Directive (PSD) The Directive on Payment Services (PSD) provides the legal foundation for the creation of an EU-wide single market for payments. The PSD offers opportunities for those involved in mobile payments. The PSD aims at establishing a modern and comprehensive set of rules applicable to all payment services in the European Union, Norway, Iceland and Liechtenstein. The target is to make cross-border payments as easy, efficient and secure as 'national' payments within a participating nations. The PSD also seeks to improve competition by opening up payment markets to new entrants thus fostering greater efficiency and cost-reduction. At the same time the Directive provides the necessary legal platform for the Single Euro Payments Area (SEPA). After the formal adoption by the Council and the European Parliament and the publication, the provisions of this Directive will need to be implemented by all participating nations by 1 November 2009.


61 - Lessons, trends and issues from analysis of global pilots and initiatives

The PSD is a European level regulatory framework, interpretation of this framework, creation of actual legislation, implementation and governance are the responsibilities of individual Member States. The intentions of the PSD can be summarised as follows: —

Allow non-banks to offer payment services thereby opening the market up for competition

Making market entry for payment institutions subject to license requirements

Provide an adequate regulatory framework in which these non banks would operate

Currently any payments institution that works at a European scale now needs a regulatory license for every single country. Under PSD regulation only one license is needed to serve all European areas.

The situation before 1 November 2009 was that in order to gain access to payments infrastructure, one had to obtain a license to become a credit institution (banking license or electronic money institution license). These licenses are subject to very strict regulations and are hard to obtain. The PSD seeks to form an intermediate step between those with and without a credit institution license via a relatively easy to obtain payments institution license.

5.7.1

For whom is PSD important?

The PSD is important for two groups: —

those who are currently perform activities that require a license under the PSD legislation from 1 November 2009 onwards.

non-banks that consider taking the opportunity granted to them by PSD to enter the payment services market.

For the former group, PSD constitutes an additional set of regulations to comply with. For the latter group, PSD constitutes an opportunity to become a payment services provider, which was until November 1st 2009 the domain of financial institutions.

5.7.2

Who has to adhere to PSD regulations?

The exact definition of a payments institution is important for mobile payment initiatives and mobile network operators, since important groups are excluded from the scope PSD. Use of mobile payments to purchase digital goods received on the mobile phone is excluded from the scope of the PSD as long as the party providing the payment application (usually mobile network operator) also adds some intrinsic value to the goods in the form of for example access, distribution or search facilities. This means that the sale of ring tones, the paid delivery of news headlines, weather forecasts, access to directories etc. does NOT fall


Mobile payments 2010 - 62

under PSD regulations, meaning that the provider of such services does not need a license to continue its business. So providers do not have to comply with PSD as long as they only function as an intermediary which offers other companies’ products to end consumers. Technical providers to payment institutions such as providers of processing, data storage, data, authentication and IT communication providers are not classified as payment institutions and therefore do not need to comply with the PSD. The PSD does apply however, where the provider of the payment functionality simply acts as an intermediary for the processing of the payment and no extra services or intrinsic value is added to the goods by this party (distribution is seen as a ‘value add’ in this case).

5.7.3

To what should these parties adhere?

Entities without a banking license currently providing payment services that do fall under the category mentioned above will need to comply with the PSD regulations which can be categorised at a high level into the following: Regulations to obtain a license to operate as a ‘payment institution’. These include proving the existence of sound administrative, risk management and accounting procedures, proper internal control mechanisms, directors and managers that are of good repute. This license to operate as a ‘payment institution’ is issued by the national banks of Member States. According to the Dutch Central Bank (DNB), the expected costs for a license are EUR 3,100 in fees and approximately 40 man hours for gathering the necessary information. Fulfilling the ongoing information duty to the central bank will cost approximately 10 hours per year, according to DNB. Capital requirements, payment institutions will be required to maintain a certain minimum level of capital. For mobile payments this will be an initial amount of €50,000. Maximum payment execution time will need to be one day once the PSD is fully in place (31 December 2012). This rather strict rule will also apply to holders of a full banking license (who also need to comply with PSD). For mobile operators that consider setting up a payments service, it means that the time between a payment order from a consumer to the time that the merchant actually receives his money is not allowed to be more than one day. This concept disables earning interest over the transacted amount in the time between the gathering of the money from the consumer and the pay-out to the merchant. With this time legally being limited to one day – this source of revenue will become negligible. Consumer information and protection, these include regulations aimed at achieving consistency around terms and conditions, display of foreign exchange rates before point of acceptance and documented customer receipts and acknowledgements. However there will be an exemption to these requirements for small value payments where individual payment transactions must not exceed €30 or there must be a spending limit of €150 or the maximum amount of funds stored on the instrument must not exceed €150 at any time. Consumer legal liability is limited to €150, the excess in liability lies with the provider. Users should be allowed to easily repudiate consent and authorisation. Payment institutions


63 - Lessons, trends and issues from analysis of global pilots and initiatives

must provide a suitable period for asking a refund and must debit/credit the customer’s account with a value date equal to the point in time at which the account is booked. Payment institutions must not charge fees for the closing of accounts. Protection of consumer funds where payment institution also engages in non payment related activities, payment monies must be kept separate from non payment monies and activities. Additional remarks: The directive allows Member States to not require a license from Payment Institutions with a turnover of less than €3 million. In practice it means that Member States can turn a blind eye to small payments initiatives with a turnover of under three million euro. However, should the turnover reach EUR 3 million, PSD mandates the Member State to enforce PSD regulations upon the payment initiative.

5.7.4

The opportunity for the new Payments Institutions

Where payment services are provided via a – in general – 4 party scheme then these schemes should be open to any party complying with the PSD and scheme’s rules subject to adequate risk controls to ensure appropriate requirements in order to ensure integrity and stability of those systems.


6

Stakeholder cooperation and standardisation

There are many reasons why cooperation between key stakeholders has been difficult for mobile payments. This chapter lists just some of the key reasons and some of the emerging trends around cooperation. Also the importance of standardisation in the mobile payment industry to ensure interoperability and rapid growth is discussed and some of the key standardisation initiatives in the market today are described.

6.1 Why stakeholder cooperation has been hard to achieve One of the commonly cited reasons for the relative lack of success of mobile payments so far has been the absence of productive cooperation between key stakeholders, namely the financial institutions and the mobile network operators. There have been many reasons for this lack of cooperation, some of these (in no order of priority) are:

6.1.1

Desire to diversify from core businesses

The turn of the millennium, the last key milestone for the popularity of mobile payments was also a period of corporate strategic thinking and planning that expected the advent of the Internet to lower or destroy the barriers to entry into different industries. Thus mobile network operators during this period were making plans to morph into financial institutions and financial institutions were exploring the set up of their own telecommunications networks. The bursting of the dot com bubble put an immediate stop to such plans and thinking. The resulting reflection within these organisations revealed that while the Internet makes it slightly easier to access the customer by providing another cheaper channel, the internal and back office processes required to offer the products and services of another vertical industry requires years of learning and experience. Fast forward to 2010 and stakeholders have realized that it is more cost effective, safer, and faster and adds more value to the customer if they focus on their individual core business and expertise and partner with other stakeholders for their expertise. For example, the profitable provision of payment functionality from a financial viewpoint requires knowledge and experience in risk management, financial compliance management and access to a merchant network; this is core expertise of financial institutions. Similarly mobile network operators have the experience and billing infrastructure for processing large numbers of relatively small transactions. Both parties have realized the limits of their individual expertise and are now seen to be more willing to partner with each other to gain this expertise.

6.1.2

Debate over who ‘owns’ the customer

One of the still unresolved issues around the cooperation between mobile payment stakeholders is the key question of customer interaction and ownership. Financial


65 - Stakeholder cooperation and standardisation

institutions and mobile network operators are both keen to maintain the contact and interaction with the customer for purposes of retention, cross and up sell. In a cooperative model, how would interaction related to the mobile payment service be shared? Current pilots are exploring this and looking for a model where the interaction and communication around the financial component of the payment can be maintained by the financial institution and that around the phone, SIM and network by the mobile network operator. Key to this approach is the role of the Trusted Services Manager, a role created and defined in the context of NFC payments. The Trusted Services Manager provides the technical and procedural backbone for stakeholder cooperation and is also best placed to assist in the routing of customer interaction to the right stakeholder, financial institution or mobile network operator.

6.1.3

Difficulties around branding in cooperative models

Cooperation is slowed and made difficult when each stakeholder is keen to associate and imprint their own brand on the new payment system. The presence of multiple brands creates confusion and makes the acceptance of the system difficult with the customer and slows the adoption of the system. Current pilots are addressing this by creating a new brand for the payment system and using existing brands of financial institutions and mobile network operators around the individual interactions of these organisations with the customer.

6.1.4

Debate over the location of the secure element

The preferred location of the mobile payment application for the mobile network operator is the UICC or SIM. Mobile network operators are willing to give up the management of the UICC to the Trusted Services Manager who acts as a real estate agent for the SIM. While financial institutions and handset manufacturers are willing to accept and cooperate around this model they do not want to rule out other models such as a second Secure Element on the phone with the payment application or that of the application being built into the phone independent of the UICC.

6.1.5

Inability to arrive at a workable revenue sharing model

The players of the value chain must agree on basic revenue sharing principles between industries, to avoid having different industries create different standards, which would reduce the value of mobile payments for consumers and slow down industry development. The ability to charge flexibly for different types of services and applications and to split revenues between different parties in the value chain is key to the creation of a successful environment for mobile services. It is critical to mention in closing the positive activities in motion around cooperation between key European regulatory bodies such as the European Payments Council (EPC) and the GSMA. At the time of writing these two bodies were sharing thoughts on cooperation


Mobile payments 2010 - 66

and were shortly expected to release a first paper on how the organisations represented by the two bodies could cooperate around NFC Point of Sale payments in particular. Needless to say continued cooperation between the stakeholders will be critical to the development of mobile payments.

6.2 Standardisation 6.2.1

Importance of developing mobile payment standards

Without the creation and usage of standards for mobile payments the industry risks the development of non-interoperable islands of pilots and solutions. Creation of such islands will invariably lead to slower customer and merchant adoption and the survival of inefficient solutions with higher end user costs. Open standards, not specific to any operator or payment scheme, ensure interoperability across platforms and services, and are critical for ensuring widespread access to mobile payment services. Without mobile payment standards, companies are less likely to invest in mobile payment platforms because they would not be able to reach a broad enough market to make it viable. An example from the financial domain can help to clarify this further. In Europe within the financial domain payment solutions have been created in the past within geographic islands, without the use of common Europe wide standards. In the case of direct debit payments as an example this has led to a wide range of costs per transaction per European country and difficult (costly) to no interoperability for the consumer across countries. Recently the European Commission (EC) through the European Central Bank (ECB) and subsequently the European Payments Council (EPC) have been implementing the vision of the Single European Payments Area (SEPA). The vision of SEPA is to lower the cost of payments across Europe and achieve optimal market driven interoperability through the creation and use of standards for common payment products. The SEPA is expected to result in a total saving of â‚Ź123 billion the European Union, cumulative over 2007 - 201120. Another example is found in the world of electronic invoicing where various industry groups and solution providers have developed offerings using own proprietary specifications which are incompatible with each other, severely limiting the growth of e-invoicing and the potential saving of up to 238 billion Euros. Similarly mobile payment pilots are being launched within Europe and around the world using proprietary messaging, infrastructure, operational and governance protocols. As these pilots succeed and continue to develop into live applications, interoperability will become

20

http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/08/52&format=HTML&aged=0& language=EN&guiLanguage=en


67 - Stakeholder cooperation and standardisation

more critical and more costly. The time to act in developing standards for the mobile payments industry is now while live implementations are still few and far between.

6.2.2

Standardisation initiatives

Simpay Simpay was founded by the mobile operators Vodafone, T-Mobile, Telefonica and Orange, as a standardisation initiative with the goal of developing an interoperable mobile payment infrastructure and potentially a European clearing house for mobile phone payments in as many as 20 European countries. Simpay has unfortunately a notable failed attempt at multi-national mobile network operator standardisation and was closed down in the middle of 2005.

GSMA The GSM Association (GSMA) is a global trade association representing 700 GSM mobile phone operators which serve 82% of the world’s mobile phone users. A key discussion in the area of mobile payment standardisation is the location of the mobile payment application within the mobile device for secure Point of Sale NFC payments. The various combinations possible will be described in section 8 of this report. The GSMA is supportive of the UICC solution, i.e. the mobile payment application is located on the smart card provided by the mobile network operator. The GSMA started lobbying for this solution under the project name ‘Pay-Buy-Mobile’ The Pay-Buy-Mobile initiative supports the use of the Single Wire Protocol, which was proposed to ETSI as a standard in October 2007 and ratified in February 2008, to link the UICC contained within the mobile handset with the phone's embedded NFC chip. The NFC chip can communicate with existing contactless payment systems to deliver a wide range of services, such as credit and debit payments. There are 52 mobile operators with 1.7 billion customers participating in the initiative. A number of key handset manufacturers including Nokia, Motorola and Samsung have joined the GSMA ‘Pay-Buy-Mobile’ initiative and have given support to the payment application residing on the UICC. GSMA and EPC have started a formal relation in 2008 with regard to mobile payments.

Open Mobile Alliance (OMA) OMA was formed in June 2002 by nearly 200 companies including the major mobile operators, device and network suppliers, information technology companies and content and service providers. The fact that the whole value chain is represented in OMA marks a


Mobile payments 2010 - 68

change in the way specifications for mobile services are created. Rather than keeping the traditional approach of organizing activities around 'technology silos', with different standards and specifications bodies representing different mobile technologies, working independently, OMA is aiming to consolidate into one organisation with all specification activities in the service enabler space. The Open Mobile Alliance (OMA) has established the M-Commerce and Charging working group (MCC) that is also working on mobile paymentrelated issues. The MCC currently has liaisons established with Mobey Forum.

European Telecommunication Standard Institute (ETSI) Since its creation in 1988, The European Telecommunications Standards Institute (ETSI) has produced both wireless and wired standards (e.g., GSM, DECT, TETRA etc.), as well as standards relating to telecom, electronics and broadcasting. ETSI develops standards and other technical documentation for telecommunications, broadcasting and information technology. While its prime objective is to provide a forum for the industry, it also collaborates with other organisations through various partnership projects. ETSI is officially recognized by the European Commission and the EFTA (European Free Trade Association, which consists of Liechtenstein, Iceland, Norway and Switzerland) secretariat. In February 2008, ETSI announced the completion of Europe’s NFC standard, based on the principles provided by the GSMA.

Mobey Forum The mission of the Mobey Forum is to facilitate banks to offer mobile financial services through the exchange of information, networking and interaction with the industry. The main focus is on the development of sustainable business model alternatives. The Mobey Forum membership consists of a number of large banks, technology vendors, payment processors and mobile network operators. Several banks are already entering mobile related services and creating solutions based on some of the work done by Mobey Forum. Mobey Forum first stated its requirements for mobile financial services in its Preferred Payment Architecture 1.1 document, published in 2001. Key tenets of this document were: —

Service provisioning by banks, operators and terminal manufacturers have to be independent from each other.

Banks manage the authentication in their banking and payment services.

Open and non-proprietary standards are to be supported.

Easy-to-use and fast-to-use services that offer value for money are the key success factors to a wide-scale customer acceptance in the mobile financial service area.


69 - Stakeholder cooperation and standardisation

MoSign The MoSign project (short for Mobile Signature) initiated by the companies Deutsche Bank, Ericsson, Materna, Microsoft, Sema Group, Siemens and TC TrustCenter has plans to demonstrate the deployment of electronic signatures using a ‘mobile signing device’. A prototype mobile signing device comprised a Siemens IC35 organizer with an integrated WAP browser and a Smart card reader. To generate a mobile signature the user inserted a Smart card into a card slot. The digital keys were stored on the Smart card and the signing application was based on the WAP 1.2 Crypto SignText implementation in the WAP browser stack. In March 2001, four German banks - Deutsche Bank, Commerzbank, Dresdner Bank and Hypovereinsbank announced that they would use the findings from the MoSign project and would develop it into a single standard for electronic signatures used in conjunction with mobile devices and financial services.

NFC Forum The Near Field Communication Forum was formed to advance the use of Near Field Communication technology by developing specifications, ensuring interoperability among devices and services, and educating the market about NFC technology. Formed in 2004, the Forum now has over 130 members. Manufacturers, applications developers, financial services institutions, work together to promote the use of NFC technology in consumer electronics, mobile devices, and PCs. The goals of NFC forum are to: —

Develop standards-based Near Field Communication specifications that define a modular architecture and interoperability parameters for NFC devices and protocols.

Encourage the development of products using NFC Forum specifications.

Work to ensure that products claiming NFC capabilities comply with NFC Forum specifications.

Educate consumers and enterprises about NFC.

To meet these goals, the NFC Forum: —

Develops standards-based specifications that define NFC device architecture and protocols for interoperability.

Encourages the use of NFC Forum specifications.

Works to ensure that products claiming NFC capabilities comply with NFC Forum specifications.

Educates consumers and enterprises globally about NFC.


Mobile payments 2010 - 70

StoLPaN StoLPaN is an abbreviation for Store Logistics and Payments on NFC. StoLPaN’s primary goal is to define a transparent, uniform methodology for managing multiple services, such as payment, ticketing, access and loyalty, on an NFC-enabled mobile device, irrespective of the handset type or manufacturer, and the support infrastructure used. A common methodology will help to reduce the cost of launching new NFC applications by removing the need to develop, certify and manage multiple versions of the same application. For consumers, the implementation of a uniform platform will help create a consistent and convenient user experience across all the NFC services on their mobile handsets. The secondary objective is to demonstrate the use of the methodology in the high street. StoLPaN calls itself the NFC mobile services standards consortium.

EMVCo EMVCo LLC, was formed in February 1999 by Europay International, MasterCard International and Visa International to manage, maintain and enhance the EMV Integrated Circuit Card Specifications for Payment Systems. EMVCo's primary role is to manage, maintain and enhance the EMV Integrated Circuit Card Specifications to ensure interoperability and acceptance of payment system integrated circuit cards on a worldwide basis. EMVCo is also responsible for type approval processes for terminal compliance testing and Common Core Definitions (CCD) and Common Payment Application (CPA) card compliance testing. These testing processes ensure that a single terminal and card approval process is developed at a level that will allow cross payment system interoperability through compliance with the EMV specifications. Recognising that important standardisation work has already been undertaken within the industry, EMVCo intends to bridge the gap between the Near Field Communication (NFC) technical standards, the Mobile Payment Forum (MPF) ecosystem documents and the future EMV contactless proximity payment specifications when determining the need for specification requirements related to mobile contactless proximity payment applications. These requirements will include a personalisation infrastructure for payment applications and approval processes for mobile devices supporting contactless proximity payments. In this section it has been proposed that stakeholder cooperation and standardisation are essential to the success of mobile payments. The reasons why stakeholder cooperation has been difficult to achieve so far have been explored and the current status of cooperation has been examined. Also some of the mobile payment standardisation initiatives around the world have been described. In the next section potential risks for the breakthrough of mobile payments are discussed.


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Mobile Payments Update The Mobile Payments Update is created jointly by The Paypers and Telecompaper – their counterpart for the telecom industry. The newsletter covers all the developments in the global market for mobile payments, m-commerce, mobile ticketing, and mobile banking services. The Mobile Payments Update comprises several feature articles as well as short items with news from the previous fortnight. The Paypers on your iPhone! The Paypers is proud to offer our global readers the possibility to read the latest mobile payments news on the iPhone™ The Paypers iPhone™ application allows you to enjoy The Paypers on your iPhone™, wherever you are. Specifically designed to utilize the features and navigation of the iPhone™, this application syncs and downloads the latest global payments’ news directly to the device.

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Part 2 Market overview


7

Mobile payment services and pilots

We have identified and listed more than 150 initiatives and pilots worldwide and are most likely not complete as new initiatives and pilots are announced almost on weekly basis21. There clearly is an accelaration in growth of the number of pilot and initiatives worldwide.

180 Number of mobile initiatives

160 140

Europe

North America

Latin America

Asia

Australia

Af rica

120 100 80 60 40 20 02-2009

01-2009

12-2008

11-2008

10-2008

09-2008

08-2008

07-2008

06-2008

05-2008

04-2008

03-2008

0

Figure 7-1: Accelarating growth of the number mobile payment pilots and initiatives worldwide.

Per initiative we will give a short description, information on type of service, technology used, and the type of domain. In the table below we have listed the available options. Per initiative we will also give information (if available) on cost for usage, secure element, partners.

Type of service

Type of technology

Type of domain

Mobile ticketing

SMS

M-Payment

Mobile parking

WAP/Internet

M-Order

Mobile remittance

NFC

M-Banking

Mobile POS

USSD

M-Delivery

Voice

M-Contract

Table 0-1: Classification table of initiatives

21

Please contact us if your initiative is not (or erroneously) listed and provide us with the (correct) data as included in our listing to be included in a next edition.


Mobile payments 2010 - 74

The following initiatives are listed: Europe Austria – Paybox

Netherlands - Rabo SMS betalen

Belgium – M-Banxafe

Norway – Telenor

Belgium – Proximus M-Pay

Norway - Mobile Axept

Belgium – Proximus SMS

Poland - MPay Wallet

Belgium - Ping.Ping

Portugal - MB Phone

Czech Republic - Czech Telefonica O2

Romania – ING – MasterCard trial

Estonia – Cinemon Cinemas Ticketing

Romania - Good.bee

France - Disneyland Paris NRC trial

Spain – Mobipay

France – Payez Mobile

Spain - Banamex SMS Banking

France – TreiZen

Spain - NFC Telefónica

France - Tag Pay

Spain - Presto Park&Go

Germany – MobilZahlen

Spain - Banco Popular Español

Germany – NetBank

Swizerland - PostFinance SMS Banking

Germany – RMV mobile ticketing

Swizerland - Epay24

Germany – StarMoney Handy

UK – AvantixMetro

Germany - T-Mobile Streetgiggs

UK – Mobile theatre ticketing service

Germany – Touch&Travel

UK – Monilink

Germany - 12Pay

UK – Payforit

Hungary – MobilFizetés

UK – RingGo Mobile

Italy – PosteMobile

UK – Trinity Mobile

Netherlands – Beep! Mobile Tickets

UK - MoBank

Netherlands - Rabo Mobiel: mobile banking & NFC

Europe – Atlas Interactive SMS billing

North America Canada – Everyman Cinema Club Mobile Ticketing

US – Mobiqa Venue Ticketing US – Mocapay

Canada – RBC Mobex

US – Obopay

Canada – Zoompass

US – Payment BuyVoice

US – America First Credit Union

US – PayPal Mobile

US – Arvest Mobile Banking

US – P2P Cash

US – BankCorp South, FirstBank, Region’s Finance,

US – Synovus

SunTrust Bank

US – Wachovia Mobile

US – Bank of America Bank the way you live

US – Fargo Mobile


75 - Mobile payment services and pilots

US – Bank of Stockton

US – m-Via US

US – Boku

US – Commerce Bank mobile banking

US – Citibank Mobile Banking

US – SizzleMoney

US – Eficash

US – Zong

US – FirstBank’s Mobile Banking Service

US – Eagle Eye Vouchering

US – Huntington Mobile Banking Service

US – Chase Mobile

US – IBC Bank

US –Zala

Latin America Argentina – Atlas Interactive Mobile Billing

Brazil – Oi Pago

Argentina – Banco Francès Mobile Banking

Brazil - Samba 38

Argentina – Banco Galicia Mobile Banking

Guatemala – Visa Pay Wave

Argentina – Banco Río

Peru - Pago Movil

Brazil – M-Cash

Venezuela - Diemo

Middle East and Asia Afghanistan – M-Paisa

Mongolia – XacBank Mobile Banking

Bahrain – Smart MTC

Pakistan – Mobilink Genie

Bangladesh – SSL Wireless

Philippines – G-Cash

Cambodia – Wing Money

Philippines – Smart Money

China – EasiRemit

Saudi Arabia – Smart Bank Service

China – UMPay

Singapore – EZ-link

China – Ali M-Pay

Singapore – SingTel

India – mChek

Singapore – M1 Mobile Payments

India – Obopay India

South Korea – BankOn

India – Oxicash SmsPay

South Korea – K-Merce

India – State Bank of India Mobile Banking

South Korea – Moneta

India – Pay Anyone

South Korea – Tesco Visa Wave

India – Citi NFC trial Bangalore

South Korea – KTF Ubitouch Mobile Banking

India – Citibank M-Banking India

Taiwan – M-Ticketing Kaohsiung

India – PayMate India

Thailand – Advanced Mpay

Japan – FeliCa Mobile

Thailand – TMB Mobile Banking

Japan – KDDI au’s Osaifu Keitai

Thailand – Kasikornbank Visa trial

Japan – Shinginko

Turkey – Bankararasi Kart Merkezi


Mobile payments 2010 - 76

Japan – S!Felica

Turkey – Turkcell

Kuwait – Viva M-Pay

UAE – Dubai Bank Mobile Banking

Malaysia – DiGi Remit

UAE – Du and Dubai First NFC trial

Malaysia – Mobile Visa Wave Payment

UAE – Standard Chartered Mobile Banking

Malaysia – One Smart PayPass

UAE – Mashreq Paymate Banking

Malaysia – Maxis FastTap

Australia Australia – Mobile Queensland

Australia – Telstra, NAB, Visa

Africa Cameroon Mobile Money

South Africa – POCit

Ghana - txtNpay

South Africa – SWAP Mobile

Ivory Coast - Orange Money

South Africa – Wizzit

Kenya – Eazy 24.7

South Africa - Cellphone Banking Absa

Kenya - Cooperative Bank of Kenya mobile banking

Sudan Saraf Mobile

Kenya – M-PESA

Zambia - CelPay

Kenya - Standard Chartered M-Banking

Zimbabwe – Mukuru.com

Kenya - Zain M-Wallet

Uganda - E-Fulusi Uganda

Sierra Leone - Mi-Pay Sierra Leone

Uganda - MTN MobileMoney

South Africa – Cell Pay Point

Worldwide – Bank-a-billion

South Africa – MTN Banking Table 7-2: Listed mobile payment initiatives per geographical region

7.1 Europe Paybox Austria www.paybox.at – Austria Short description

Paybox offers mobile parking (via SMS), ticketing for public transport (via WAP or SMS), online shoppin, tickets for (music events), mobile POS (e.g. vending machines, gas station), toll ticketing, remittance (money transfer)

Type of service

Mobile ticketing; Mobile parking; Mobile remittance; Mobile POS


77 - Mobile payment services and pilots

Type of technology

SMS, NFC

Domain

Mobile payment, Mobile order

Secured through

Paybox PIN per SMS; SMS confirmation; combination of voice call and Paybox PIN

Cost for usage

EUR 19 subscription fee per year

Partners

MNO: ONE and Mobilkom ; Merchants: lottery, casinos, online shops, retail shops, cigarette vending machines, ÖBB Railways, Wiener Linien; Technology: NXP Semiconductors, Nokia

Additional information

Austrian mobile operators Mobilkom Austria and One are the owners of Paybox Austria. All post-paid subscribers are automatically enabled for the service. Business customers use paybox for corporate services.

Potential

One of the bigger mobile payment players, large client base. Subscription fee is a hurdle for diffusion.

M-banxafe www.baseonline.be/nl/postpaid_banxafe.html - Belgium Short description

Banking transactions: payments, check the account balance and check bank transactions. Once a potential user signs up, he keys a payment request into his mobile telephone. The payee receives payment details by SMS and accepts them using a PIN code. Activating the service requires a ‘3G’ SIM card from Gemalto and a trip to the ATM to green light it.

Type of service

Mobile Banking

Type of technology

SMS

Domain

Mobile payment

Secured through

SIM

Cost for usage

There are no subscription or connection charges: each transaction is billed at EUR 0.25 including VAT to the customer and EUR 0.49 excluding VAT to the merchant. The amount of the transaction is charged to the Proximus bill; the cost of the product or service is deducted from the bank account. Costs for checking the account balance or transfers are also EUR 0.25 per request.


Mobile payments 2010 - 78

Partners

MNO: BASE, Mobistar and Proximus; Financial institution: Banksys; Technology: Gemalto; Merchants: (online) merchants that join Pay2me

Additional information

This service is accessible to anyone having a Bancontact/Mister Cash bank card and a GSM operating on one of the three Belgian mobile telephone networks. M-banxafe therefore works for debit, credit or top-up transactions.

Potential

The service is quite expensive and uses a two-sided billing system: fees are levied to both payer and payee, whereas other payment methods are offered at no charge to the payer.

Proximus M-Pay http://customer.proximus.be/nl/Mpay/index.html - Belgium Short description

Proximus M-Pay is a mobile payment system in Belgium for buying digital products online - via mobile and internet.

Type of service

Mobile POS

Type of technology

WAP

Domain

M – Ordering

Secured through

A secured page on the website

Cost for usage

Free of charge

Partners

Mobiel Operator: Proximus / Bango, supports the M-Pay system

Additional information

Customers who want to buy a ringtone, music, videos or digital content from the Vodafone live! portal, can now do so by using the Proximus M-Pay payment system. Customers can make purchases of up to EUR 10. The purchases via one-click payment will be stated in the monthly bill of the Proximus subscribers. The purchases by prepaid customers will be deducted from their calling credit.

Potential

For the low-value purchase segment, billing via the MNO is a viable way to increase conversion. The costs to the merchant are usually very high when using this method. The technology used (WAP) excludes a large portion of the target group.


79 - Mobile payment services and pilots

Proximus SMS-Pay http://customer.proximus.be/en/sms_Ticketing/index.html - Belgium Short description

SMS ticketing for the public transport system De Lijn in Antwerp and Ghent.

Type of service

Mobile ticketing

Type of technology

Users send an SMS to a short code before getting on the bus or tram. Within a few seconds they receive an SMS with confirmation of their ticket, which acts as proof of payment.

Domain

M-Ordering, M-Delivery, M-Payment

Secured through

None, reload can be done via buying credit or upload via an ATM (PIN code). For buying a transport ticket, no PIN is required.

Cost for usage

As a promotion it's offering the first SMS ticket for free. It will otherwise cost EUR 1.20 for the fare plus EUR 0.15 for the SMS, which is cheaper than the EUR 1.50 paid for tickets on board the tram. The costs of the ticket will be deducted from the call credit or will be charged on the mobile phone bill.

Partners

De Lijn

Additional information

For SMS ticketing with the mobile phone, Proximus M-Pay needs to be activated.

Potential

The ability to purchase a ticket while on the bus opens up the possibility of abuse by fare dodgers who can buy a ticket when inspectors enter the bus. Also, the EUR 0.15 per SMS will probably not cover the costs for retrieving the money from MNOs, who typically charge 25-35% of the transacted amount as a fee for collecting the money.

Ping.Ping www.pingping.be – Belgium Short description

Belgian MNO Belgacom lauched a mobile payments trial based on NFC-technology in Belgium in March 2009. In order to pilot the NFC service which was added to the m-payments service, Belgacom has partnered with Belgium food retailer Delhaize, provider of service vouchers to companies Accor Services and Coca-Cola. In the project with Accor Services, 500 Belgacom


Mobile payments 2010 - 80

employees have been given NFC tags which will be linked to their mobile phone numbers. This will enable them to make contactless payments using electronic Ticket Restaurants meal tickets stored in their Ping.Ping accounts at restaurants equipped with contactless readers. At present, the commercialisation of Electronic Ticket Restaurants is not possible in Belgium due to the lack of guidelines which regulate their use. Type of service

Mobile POS

Type of technology

NFC

Domain

M – Payment

Secured through

PIN

Cost for usage

None

Partners

MNO: Belgacom; Retailers: Delahize, Coca-Cola; Technology: Accor Services

Additional information

Czech Telefonica O2 www.cz.o2.com/osobni/en/home/index.html - Czech Republic Short description

Czech operator Telefonica O2 and the transport service provider from the Czech city Pilsen participate in an NFC mobile payments trial, running from March – December 2009. On top of being able to pay for transport rides, trial participants in Pilsen will use their NFC phones to purchase goods at participating retail shops as well as buy tickets for entertainment areas. The NFC transit application will be available for download through the Telefonica O2 network. Users will be able to top up their e-purse and transit application as well as buy new bus tickets directly from their NFC phone, on top of using the city website.

Type of service

Mobile ticketing, Mobile POS

Type of technology

NFC

Domain

M – Payment, M – Delivery

Secured through

PIN


81 - Mobile payment services and pilots

Cost for usage

Free during pilot

Partners

MNO: Telefonica O2; Technology: NXP (MiFare)

Additional information

The mobile wallet displays the available bus tickets, the travel history, the balance of the transit e-purse and the last 4 transactions.

Cinamon Cinemas Ticketing www.cinamon.ee - Estonia, Latvia, Lithuania Short description

Cinamon Cinemas customers can now buy tickets on the company's website and opt for mobile ticket delivery. A cinema ticket is then generated and delivered directly to the customer's mobile phone in the form of an SMS. Cinamon's mobi-ticket contains a unique 2D barcode as well as information about when the film starts, the customer's seats and what screen the film will be shown on. The barcoded message is then scanned at entrance. The actual purchase is made online, delivery is via SMS.

Type of service

Mobile ticketing

Type of technology

SMS

Domain

M-Delivery

Secured through

None

Cost for usage

No charge to the consumer

Partners

Cinamon Cinemas, Mobiqa, Vista Entertainment Solution

Additional information

Customers can go straight to the usher point in the cinema, streamlining entry. Since the method is based on SMS, the SMS containing the 2D barcode can easily be forwarded, which might cause problems for the cinema owner, when two people end up having the same barcode for the same cinema seat.

Potential

The initiative is a win-win for both recipient and issuer of the ticket. The recipient is less inclined to forget his/her ticket, as the mobile phone has a permanent share of pocket. The issuer of the ticket does not need to print the actual ticket, probably saving costs outweighing the extra costs of sending an SMS.


Mobile payments 2010 - 82

Disneyland Paris NFC trial France Short description

Disneyland Paris plans to roll out an NFC and contactless card payments pilot in October 2009. Developed in partnership with French financial services providers Credit Mutuel and CIC, the trial will include shops and restaurants in Disneyland Paris area. The initiative is aimed at Disneyland Paris annual pass holders who are customers of Credit Mutuel and CIC and who have a valid bank card as well as an account at a Paris-based branch. The testers' number is expected to reach 100 for NFC phones and 1,000 for contactless readers. Participants will be using a Sagem My700x Contactless NFC phone offered by mobile operator NRJ Mobile, which is owned by Credit Mutuel CIC. Payments will be charged directly to the user's Crédit Mutuel or CIC bank card.

Type of service

Mobile POS

Type of technology

NFC

Domain

Mobile Payments

Secured through Cost for usage Partners

Disneyland Paris, Credit Mutuel, CIC, NRJ Mobile

Payez Mobile www.payezmobile.com – France Short description

Six major French banks as well as four French mobile operators joined forces in cooperation with MasterCard WorldWide and Visa Europe to launch a large scale field trial to test a mobile contactless payment service, for mobile POS and ticketing.

Type of service

Mobile POS

Type of technology

NFC

Domain

M-Payment

Secured through

SIM

Cost for usage

Free during trial

Partners

Banks: BNP Paribas, CIC, Crédit Mutuel, Groupe Caisse d’Epargne,


83 - Mobile payment services and pilots

La Banque Postale, Société Générale, LCC. MNOs: Bouygues, Orange, NJR Mobile and SFR. Cards: MasterCard WorldWide, Visa Europe Technology: Gemalto, Ingenico, Inside Contactless, Oberthur, Pole-Tes and Sagem Monetel. Additional information

The Payez mobile service is started November 2007 and it includes 1,000 customers and 200 sales outlets located in the cities of Caen and Strasbourg. The service also intends to check for interoperability. Payez Mobile was previously known as Pegasus.

Potential

A project that manages to align a whole plethora of banks and MNOs must have potential. For a pilot however, this is easier than for a full-scale commercial roll out. Also, the business case for NFC-based POS payments is far from positive, and the parties involved have not managed to solve that issue. It is however the first pilot to achieve interoperability between different MNOs and banks.

Tag Pay www.tagnpay.com – France, Africa, India Short description

Tag’n Pay is a wallet application and can be used for retail transactions at the point of sale, money transfers, ATM cash withdrawals and budget or savings management. The payment procedure works as follows: the merchant enters the amount due on a special Tag Pay terminal. The consumer (payer) enters his mobile phone number and secret PIN. In a few seconds, the clients’ phone rings. The client ‘signs’ the transaction with his mobile phone by placing the phone in the terminal. If the transaction is approved, a message appears on the terminal and on them mobile phone. The amount is credited from the consumers’ pre-paid account. The technology used for authorisation is dubbed NSDT.

Type of service

Mobile POS

Type of technology

WAP/Internet

Domain

M – Payment


Mobile payments 2010 - 84

Secured through

4 – digit PIN and one-time password (OTP)

Cost for usage

Free of charge during pilot stage – fees will be brought in place in case of roll out.

Partners

Tagittude

Additional

Each time the consumer makes a transaction, encrypted

information

information is embedded in an audio one-time password (OTP) that is sent to the payment server through your phone’s audio channel. OTPs are only valid for 1 transaction and have a very short life span, making them useless if intercepted and replayed. All transactions are confirmed by text message. Clients can require a pin code for all payments for additional protection. The service is already being piloted in Kenya, Zambia, India, South Africa, Congo, and the Democratic Republic of Congo. Tagattitude teamed up with Telemedia Group and LAM to offer TagPay in Mali. Through TagPay, Malians in France can pre-pay purchases at specified stores in Mali, which are retrieved and paid for using the mobile phone of the intended recipient.

MobilZahlen www.mobilzahlen.de – Germany Short description

Mobilzahlen Handyparken is a German service, which aims at people seeking more convenience in purchasing their parking ticket. Drivers can use their mobile phones to pay for their parking tickets in the German cities of Cologne, Augsburg, Hamburg, Neustadt, Lübeck, Celle and Friedberg. Users can subscribe to the service by registering their mobile phone number and the license plate(s) of their car(s) and postal address with Mobilzahlen. Mobilzahlen then sends a letter to the address asking for the bank account number and a signature to authorise Mobilzahlen to set up direct debit. Users can purchase parking tickets by calling a toll-free number. The user pays per minute.

Type of service

Mobile parking

Type of technology

IVR

Domain

M-Payment, M-Order

Secured through

None, username/password to change details online

Cost for usage

EUR 0.11 – EUR 0.19 per transaction


85 - Mobile payment services and pilots

Partners

Community parkings in participating cities

Additional information Potential

The service fulfills a need of the parking consumer. The subscription procedure however is quite complicated, as the MobilZahlen account is connected to a bank account. This method saves the consumer the trouble of funding a new wallet, but confronts him with the necessary red tape. A similar service is the UK fails to take off, but with large German cities making the service available, MobilZahlen is a cheap, convenient service with a lot of potential. Mobilzahlen allows users to pay the parking fee per minute. Instead of the user having to predict the amount of time he wants to park beforehand, he can start his parking ticket the moment he parks and stop it the moment he takes off again.

MPay Germany Short description

Mobile payment service for online purchases as an alternative to online payment services like PayPal or Firstgate's Click&Buy.

Type of service

Mobile remittance

Type of technology

SMS

Domain

M-Payment

Secured through

Mobile number plus PIN.

Cost for usage

Not disclosed yet

Partners

MNO: Vodafone, O2 Technology: Paybox

Additional information

The service is based on automatic withdrawals from bank accounts and SMS payments. The customer buys something online or via a mobile portal, enters her/his phone number, receives an SMS to approve the order and the money is automatically transferred from their account to the account of the seller.


Mobile payments 2010 - 86

NetBank Germany Short description

The portal is based on Sevenval Mobile Platform and offers a simple interface plus online banking features for all web-enabled mobile devices. At mobil.netbank.de, users can view their account turnover, transfer money, set up standing orders and much more. Each transaction requires a transaction authentication number (TAN) for authentication and an additional safety code is required on login in order to protect the account against fraud. Other European banks are currently using the platform for their mobile banking portal.

Type of service

Mobile banking

Type of technology

SMS and WAP/Internet

Domain

M-Payment

Secured through

Password and TAN codes

Cost for usage

Free of charge

Partners

Sevenal, Netbank

Additional information

The service was launched in October 2008

RMV mobile ticketing trial Germany Short description

NFC field trial for mobile ticketing for public transport in the region of Frankfurt am Main. RMV introduced its mobile ticketing scheme in 2006 and is one of the pioneers in this area. The main target of this enhanced ticketing solution is to enable customers to purchase mobile tickets even more spontaneously and easily. The ticket will now be stored in the embedded secure element of the NFC- enabled mobile phone, and can be inspected just by holding the device close to the inspector’s reading device, which checks the validity of the ticket.

Type of service

Mobile ticketing

Type of technology

NFC


87 - Mobile payment services and pilots

Domain

M-Order, M-Delivery, M-Payment

Secured through

Embedded

Cost for usage

Free during trial

Partners

The partners for this project are Nokia, T-Systems, traffiQ and the traffic association Frankfurt (RMV). Nokia and T-Systems partner with independent mobile retailer SMS Michel Communication to market NFC-enabled mobile phones.

Additional information

The scheme was one of the first to introduce NFC-enabled services. In June 2008, the service announced to expand the geographical reach of the pilot to all eleven cities served by the RMV.

Potential

This pilot is far ahead of its time. With less than 1% of all new mobile phones produced in 2008 being NFC-enabled, this pilot comes too soon. Estimates are that in 2011 only 4% of all new phones will be NFC-enabled. Also ticket inspectors need to carry specially developed devices to check the validity of tickets. It takes deep pockets to continue a service like this with so little prospect of wide-spread adoption. The market they aim for (travellers) is well-picked.

StarMoney Handy www.starmoneyhandy.de – Germany Short description

StarMoney Handy allows financial organisations to provide their own mobile service and free mobile banking access to all online accounts, even accounts with different organisations.

Type of service

Mobile banking

Type of technology

WAP

Domain

M-Payment

Secured through Cost for usage

Starmoney Handy's mobile banking service can be used after downloading the StarMoney Mobile 2.0 Handy software. The fee is EUR 6.00 /month, which includes unlimited free phone calls to family and colleagues.

Partners

Initially, the service is available through Star Finanz and Kreissparkasse DĂźsseldorf building society. After a four months


Mobile payments 2010 - 88

pilot, StarMoney Handy is commercially launched by five German Sparkasse banks, one Volksbank and Deutsche Sparkassenverlag. Additional

Once they have signed a contract, customers get the StarMoney

information

Mobile 2.0 Handy software for access to the banking systems of around 4,000 financial organisations.

T-Mobile Streetgigs http://img.pte.at/files/binary/2341.pdf - Germany Short description

German mobile applications developer Mindmatics has developed the mobile ticketing service for the T-Mobile Street Gigs, a series of pop concerts at unusual locations in Germany. Mindmatics has provided T-Mobile with an online-based registration for free SMS tickets for the concert, which can be scanned at the concert's location using barcode scanners

Type of service

Mobile ticketing

Type of technology

SMS

Domain

M-Delivery

Secured through

None, since content is free

Cost for usage

Free

Partners

None

Additional information Potential

The mobile phone can play a very useful role in mitigating the use of paper entrance tickets. The recipient is less likely to forget his ticket, and the event organiser saves money in printing the tickets. For free tickets (like these), the fact that tickets can be forwarded to friends and family is an additional advantage.

Touch&Travel www.bahn.co.uk/db_uk/view/news/20080301.shtml - Germany Short description

Railway operator Deutsche Bahn and Vodafone Germany cooperate for a mobile ticketing trial that started on 29 February 2008. The trial is executed by 200 persons, who regularly travel on the ICE route Berlin-Hanover. The pilot will also run in a part


89 - Mobile payment services and pilots

of Berlin's S-Bahn and in Potsdam's public transport routes. Type of service

Mobile ticketing

Type of technology

NFC

Domain

M-Order and M-Delivery

Secured through

SIM

Cost for usage

Free of charge during trial

Partners

Partners for the project are public transport providers Verkehrsbetrieb Potsdam, Berliner Verkehrsbetriebe, as well as technology partners Atron electronic, smart card developer Giesecke&Devrient, Motorola and semiconductor manufacturer NXP.

Additional

In July 2007, Vodafone Germany selected Paybox as the processor

information

to launch a national mobile payment system in Germany. With the paybox Mobiliser Products (Money Mobiliser, TopUp Mobiliser, Mobile Wizard), Vodafone Germany enables their customer to exploit the whole potential of m-commerce for secure payments in the Internet, m-commerce, content and NFC payments. According to the planning, travelers all over Germany can enjoy make use of the service in 2010.

Potential

The initiative has assumed that NFC-phones would become widely available in 2010. This is not the case. A technology push product.

12Pay www.dimoco.at/en – Austria, Germany Short description

Austrian mobile payment services provider Dimoco has launched a new m-payment service called 12Pay, which is aimed at business customers. Using 12Pay, businesses can enable clients to pay for products and services via their mobile phone bills. Consumers can confirm the payment process via SMS or web. Initially, the service is only available in Austria and Germany but Dimoco plans to roll it out in other countries.

Type of service

Mobile POS


Mobile payments 2010 - 90

Type of technology

SMS

Domain

M – Payment

Secured through

PIN

Cost for usage

None for end user

Partners

Technology: Denarii Payments

Additional information

MobilFizetés www.fizessenmobillal.hu/eme/ENindex.php - Hungary Short description

With the help of OTPdirect and Elsı Mobilfizetés Elszámoló Zrt. (EME Zrt.) consumers can pay for their parking, can buy motorbike and highway stickers and buy subscription to a journal directly from their bank account or from preloaded wallet. The preloaded wallet comes with a monthly fee, the direct deduction from the bank account is free of charge. The amounts of low value purchases accumulate until it reaches HUF 500 (EUR 1.90), then the amount will be debited to the bank account at the end of the month. The user can fund the wallet using credit card, postal checques, wireless transfer or cash deposit at one of EME’s outlets. In March 2009, the service was extended enabling participants to pay for utility bills using the service.

Type of service

Mobile Parking, Mobile Banking

Type of technology

SMS

Domain

M-Payment, M-Order, M-Delivery

Secured through

PIN

Cost for usage

From HUF 15 (EUR 0.06) per transaction

Partners

MNO: Pannon, T-Mobile; Bank : FHB and MPP; Technology: Enigma

Additional information

In September 2008, 30.000 clients were able to pay the parking fee with the help of their mobile phones in 16 towns all over the country and in all the districts of Budapest.


91 - Mobile payment services and pilots

Potential

With most parking spaces in Hungary connected to the system, it is quite easy and handy. The service fulfills a need to pay parking space per minute and reduces the hassle of having the right change. Hungary however is still a cash-based society. The purchase of other goods and paying for utility bills do not really fulfill a need.

PosteMobile www.postemobile.it – Italy Short description

PosteMobile is the first Mobile Virtual Network Operator (MVNO) in Italy, with a software solution that allows customers of Italian bank BancoPosta to carry out payment transactions with their mobile phone. Both PosteMobile and BancoPosta are part of the Poste Italiane Group. They use their position in the mobile and banking worlds. Users send a command from their mobile phone to pay their bills, send a telegram or a fax, top up their account and wire money from their BancoPosta account and from PostePay, BancoPosta prepaid or credit card.

Type of service

Mobile remittance, Mobile banking

Type of technology

SMS

Domain

M-Banking, M-Payment

Secured through

SIM, username/password

Cost for usage

MVNO rates apply

Partners

MVNO: PosteMobile ; Bank : BancoPosta ; Technology: Gemalto

Additional information

PosteMobile was launched in November 2007 and immediately started to deploy mobile-banking services to their customers. The project has proven quite successful with over 200,000 BancoPosta customers using these services in just six months, among the over 250,000 PosteMobile customers. PosteMobile announced in June 2008 that it would pursue its innovation strategy by rolling out mpayment and m-commerce services. Their goal is to turn the mobile phone into a real e-wallet.

Potential

The internet penetration in Italy is among the lowest in the EU. Therefore, the mobile phone is a suitable channel to conduct banking business with in Italy. The combination of a bank and M(V)NO offering mobile payments has proven to be successful in Japan – but with the limited market share of both Italian


Mobile payments 2010 - 92

companies, this success is unlikely to be repeated.

Beep! Mobile Tickets www.beep.nl – The Netherlands Short description

Beep! allows customers to pay for tickets over the internet and then receive the ticket over SMS.

Type of service

Mobile ticketing for events

Type of technology

SMS sending a barcode

Domain

M-delivery. Ordering a ticket is done by the internet, the delivery takes place on the mobile phone (barcode).

Secured through

Register at Beep. The mobile phone number is the user name. With the mobile phone number and PIN code customers can log on the internet to order tickets.

Cost for usage

Service fee, cost depend on cost of the ticket

Partners

Beep! Mobile Tickets is a joint venture of KPN and Imtech.

Additional information

Beep! works together with organizations such as The Entertainment Group, a producer and organiser of concerts and festivals in the Netherlands.

Rabobank NFC trial The Netherlands Short description

Rabobank has become the first bank in Europe to introduce mobile banking and a mobile service in one with Rabo Mobiel. Rabobank/Rabo Mobiel also participates in NFC trails. NFC payments using mobile phones are tested at (among others) the fast food chain Febo. Customers with a mobile phone with a NFC chip can access the Febo automatic food dispenser to buy food by swiping their mobile phone along the food dispenser. The payment is taken from a mobile wallet connected to the phone.

Type of service

Mobile ticketing, mobile POS


93 - Mobile payment services and pilots

Type of technology

NFC and SMS

Domain

M-Payment

Secured through

PIN

Cost for usage Partners

MVNO: Rabo Mobiel (MNO: KPN). The partner within this scheme is multimedia company Talpa. NFC trial partners e.g.: Febo, C1000, Diergaarde Blijdorp (Zoo).

Additional information

In the roadmap it is the banks vision also to use mobile phones for contactless payments. This seems to be the common goal for the banks to replace cash and wallets with one device that could provide all this in a compact package. MVNO Rabo Mobiel had about 125,000 customers for its mobile service in April 2008.

Potential

Like all NFC-pilots outside Asia, the Rabo NFC trial suffers from the lack of availability of NFC-enabled phones. Ironically enough, the NFC initiative has to compete with very efficient incumbent payment infrastructure, which Rabobank is part of. The target group is not yet used to NFC, making widespread adoption problematic.

Rabo SMS Betalen www.rabomobiel.nl - The Netherlands Short description

Rabo SMS betalen is a wallet and subscription based mobile payment method. For using Rabo SMS betalen (SMS payment), a customer sends an SMS to a short code to the mobile phone number of the intended recipient of the money and the amount. After that a confirmation will be sent to both sender and recipient. Payments are sent over a secured line. At the end of the process of making a payment, a codeword has to be inserted to confirm the payment.

Type of service

Mobile remittance

Type of technology

SMS

Domain

M-Payment


Mobile payments 2010 - 94

Secured through Cost for usage

None for sender until 1 January 2009, after that EUR 0.05. Loading money into the account and receiving money is free, transferring money from account to ‘ordinary’ bank account costs EUR 0.50. Of course the sender is charged for the SMS by the MNO.

Partners

Rabobank

Additional

The system is based on MiniTix, a system initially launched for

information

micropayments online. Rabo SMS betalen can be used by anyone with a Dutch bank account (not necessarily Rabobank’s) and a Dutch mobile phone number.

Potential

The much advertised context for Rabo SMS payment is splitting the bill in a restaurant with friends, when typically no one has exact change. Although this is a viable context, it is unlikely that situations like these happen often enough to attract a sufficiently large consumer base.

Telenor Norway Short description

A cooperation between Norwegian bank DnB Nor and MNO TeleNor to provide contactless payments. Both companies own 50% of the stock in TSM Nordic, a trusted third party, established for this purpose and this project.

Type of service

Mobile remittance Mobile ticketing

Type of technology

NFC

Domain

M-Payment

Secured through

SIM

Cost for usage

Not disclosed

Partners

Bank: DnB Nor MNO: TeleNor

Additional information

Still in pilot stages, DnB Nor and TeleNor both launch a separate pilot in Oslo, Norway


95 - Mobile payment services and pilots

Mobile Axept http://www.mobileaxept.com/eng – Norway Short description

mobileAxept is a technological platform that allows user to pay with their credit cards using your mobile phone. Users can register their credit card (number, expiry date and CVC2 security code) and connect it to their MobileAxept account. Currently users can only pay by MobileAxept in some taxis participating in a trial.

Type of service

Mobile POS

Type of technology

SMS

Domain

M – Payment

Secured through

4 digit PIN

Cost for usage

Depends on operator

Partners Additional information

MPay Wallet www.mpay.pl/en/ - Poland Short description

Mobile wallet application that can be accessed via USSDmessages. The user can fund his wallet via a bank transfer (no fees charged). At the point of sale of participating merchants, end users can pay via their MPay wallet dialing *145*Merchant_ID#. An IVR system will mention the transaction, and if the end user agrees, he enters his PIN. mPay will confirm the message that the transaction is in progress. The user can hang up and payer and merchant both receive a confirmation of the payment. In a separate move, Polish bank Citi Handlowy, mobile operator Polkomtel (Plus) have teamed with mobile payments company mPay to launch a mobile payment service which allows users to


Mobile payments 2010 - 96

pay for Warsaw transport authority (ZTM) tickets. Dubbed 'Pay With Your Mobile’, the service enables Plus customers to make mobile payments for ZTM time-limited tickets directly from their Citi Handlowy bank account. Initially, the service is available to passengers of the public municipal transport in Warsaw. In order to buy a ticket, subscribers dial ‘145’, enter a code specific to the ticket type and then press #. Users can purchase 20-minute, 40-minute, 60-minute or 90minute time-limited tickets. Users do not need to install applications and the service works with all mobile phone models. Type of service

Mobile POS, Mobile ticketing

Type of technology

USSD

Domain

M – Payment

Secured through

4 digit PIN

Cost for usage

None for the end user, for the merchant “A commission for accepting mPay payments is very low (just a few percent) for every transaction. It is individually negotiated and fixed by contract.” According to mPay

Partners

MNO: Polkomtel (Plus)

Additional information

MB Phone www.sibs.pt/pt/mb/prodserv/mbphone/ Portugal Short description

MB Phone allows users to make online payments via WAP websites using their mobile phones. Clients have to choose the TeleMultibanco checkout option when paying for a product and only provide their mobile phone number as a form of identification, rather than bank account data. Users then receive an SMS with a link to WAP Payments TeleMultibanco and confirm the transaction using a TeleMultibanco short code. Customers also receive confirmations of successful transactions via SMS. In order to use the service, customers need to register for the TeleMultibanco service, which is already used at ATMs for certain mobile transactions. Also required are phones that support WAP,


97 - Mobile payment services and pilots

as well as adequate pricing plans. Type of service

Mobile POS

Type of technology

WAP/Internet

Domain

M – Payment

Secured through

4 – digit PIN

Cost for usage

Free during trial period (until 30 June 2009)

Partners

MNO: Vodafone, Optimus, TMN, processor: SIBS

Additional information

ING, Mastercard trial www.ingbank.nl – Romania Short description

Dutch banking group ING has teamed with MasterCard to develop a NFC-based mobile micro-payments service based on MC PayPass. Trial participants are to be able to pay for low value purchases of up to RON 80 (EUR 20.66) by tapping their phones against contactless terminals installed in 30 to 40 locations. On top of the mobile payments service, participants as well as merchants will have access to marketing services provided through smart posters that rely on NFC.

Type of service

Mobile POS

Type of technology

NFC

Domain

M-Payment

Secured through

Embedded

Cost for usage

Free during trial

Partners

Financial: ING, MasterCard; Technical: Collis (Netherlands), LogicaCMG (Netherlands), Venyon (Finland) and Toro (Taiwan).

Additional information

The program will focus on consumer and merchant experience and will include a maximum of 500 consumers equipped with Nokia 6212 NFC-enabled handsets embedded with Maestro PayPass technology.


Mobile payments 2010 - 98

Potential

This NFC pilot suffers from the same drawbacks as similar initiatives: the lack of NFC-enabled phones. Even if these phones were to become available on a wide scale, Romania is likely not to be in the first wave op adoptors. The payment infrastructure it is to compete with is not so efficient, so if ING succeeds in setting up an efficient payment infrastructure, it might stand a slim chance.

Good.bee www.goodbee.ro/en – Romania Short description

BCR bank and Good.bee Mobile Transactions offer users access to mobile transactions, a current account and a Visa Electron debit card Using the debit card, users can make purchases in shops displaying the Visa logo, withdraw money from an ATM and check money available in the account. In order to use the service, customers have to call a Good.Bee access number. Customers can view information about their BCR accounts, top up their or other persons’ mobile phone prepaid accounts, transfer money to another good.bee client’s BCR account using a mobile phone number, transfer money to any bank account in Romania as well manage their bank accounts (change PIN or block card). In order to use these services, the subscribers must have an account at BCR. Good.bee Mobile Transactions can be used from any type of mobile phone, without the need for any application or internet access.

Type of service

Mobile POS

Type of technology

SMS

Domain

M – Payment

Secured through

PIN

Cost for usage

Starter kit: RON 26 (EUR 6), money transfer: EUR 0.35 – 0.56, balance check: EUR 0.14 – EUR 0.21

Partners

Financial: BCR and Visa; Technology: Good.bee

Additional information

The company expects some 1.3 million banking transactions in 2009 and targets 100,000 customers in 2009, according to the managing director of good.bee Romania Sorin Bulai. The initial


99 - Mobile payment services and pilots

investment made by Good.bee reached over EUR 1.5 million.

Mobipay www.mobipay.com – Spain Short description

Mobipay is a system that activates existing payment means (normal or virtual credit, debit or pre-paid cards) and that allows to carry out a variety of transactions transforming the mobile phone. Mobipay can e.g. be used for purchases on the internet, pay for a taxi, top up a prepaid card, public transport ticketing, authorizing payments (pay an invoice) and send money to another person. Users can choose to link their Visa or MasterCard debit or credit card to their Mobipay account and pay from their debit/credit card, or – for smaller purchases (< EUR 6) – can choose to have the amount deducted from their airtime credit or charged to their phone bill. P2P payments are not yet possible.

Type of service

Mobile ticketing, Mobile parking, Mobile remittance, Mobile POS

Type of technology

SMS, USSD

Domain

M- Payment, M-Order, M-Delivery

Secured through

A personal Mobipay number, the telephone number associated to Mobipay, a PIN number of the telephone associated to Mobipay.

Cost for usage

8 cents per transaction

Partners

MNO: Orange, Telefonica, Vodafone; Banks: 9 Spanish financial institutions; Technology: Oberthur

Additional information

Mobipay is a model open to all mobile telephone operators and financial or non-financial card issuing entities who wish to offer mobile payment services to clients.

Potential

Mobipay is perhaps Europe’s most promising mobile payment method, because of the plethora of options it offers consumers and the sheer number of MNOs and financial institutions cooperating. Mobipay’s offering is very complete includes services in payment contexts where it really fulfills a need.


Mobile payments 2010 - 100

Banamex SMS Banking www.telefonica.com/home_eng.shtml - Spain Short description

To use the mobile banking service, Telcel users are required to change their SIM card with a special card with security settings available at Banamex branches. By linking the phone number to their Banamex credit card account, Telcel subscribers can request account information, make credit card payments and pay phone and electricity bills via SMS. The limit for each transaction has been set at MXN 6 million (EUR 320).

Type of service

Mobile banking

Type of technology

SMS

Domain

M – Payment

Secured through

PIN and secured SIM

Cost for usage

Free of charge

Partners

MNO: TelCel, Bank: Banamex

Additional information

At present, Banamex has 12 million customers in Mexico, while Telcel’s subscriber base exceeds 56 million. According to Telcel’s director of value added services Marcos Quatorze, Telcel’s parent company America Movil forecasts that almost 2.9 percent of its overall mobile user base in Latin America will use mobile banking services by 2010, a figure expected to increase to 9 percent by 2012.

NFC Telefónica www.sermepa.es/ingles/index.htm - Spain Short description

Telefonica Spain and Spanish provider of R&D services Sermepa have launched a near field communication (NFC)-based mobile payments trial in Spain. Using the Virtual Mobile Wallet application which is stored on the mobile phone’s SIM, users are able to select the bank card they wish to use to make payments. Upon choosing a card, users need to wave their NFC-based handsets over NFC terminals to complete a payment process. Through applications build in the SIM trial participants are able to


101 - Mobile payment services and pilots

manage the life cycle of various financial cards, such as emission, activation, use as well as cancelation, over-the-air. Type of service

Mobile POS

Type of technology

NFC

Domain

M – Payment

Secured through

PIN

Cost for usage

Free during trial

Partners

MNO: Telefónica; Technology: Sermepa

Additional information

Presto Park&Go www.prestoparking.com – Spain Short description

Prestoparking offers users of parking meters in the Spanish municipality of Caldes d’Estrac (near Barcelona) the possibility to pay their parking ticket by mobile phone. Without preregistration, users can send an SMS with the time until which they want to park their car and the license plate number of the car to a short code. The amount due is then either deducted from the pre-paid credit or added up to the monthly phone bill. The service as such is free of charge. The service is available for users of the Orange, Vodafone and Telefónica networks.

Type of service

Mobile parking

Type of technology

SMS

Domain

M – Order, M – Payment

Secured through

PIN

Cost for usage

Non

Partners

MNO: Telefónica, Orange, Vodafone; Technology: PrestoParking

Additional information


Mobile payments 2010 - 102

Banco Popular Español www.telefonica.com/home_eng.shtml - Spain Short description

Spanish bank Banco Popular Espanol and Telefonica launched a web-enabled mobile banking service for 3G iPhone and iPod Touch users. The service enables Telefonica subscribers to check their Banco Popular Espanol bank accounts, send money, make purchases and block or activate cards via the internet. Telefonica designed a software application to adapt Banco Popular’s access systems, information and operations to the iPhone technology.

Type of service

Mobile banking

Type of technology

WAP/Internet

Domain

M – Payment

Secured through

4 – digit PIN

Cost for usage

Free of charge

Partners

Telefonica, Banco Popular Español

Additional information

In 2009, Banco Popular Espanol had more than 80,000 mobile banking customers and manages around 500,000 mobile transactions per month.

PostFinance SMS Banking www.postfinance.ch – Switzerland Short description

Swiss bank PostFinance offers a free SMS transfer service to its Postkonto customers. After registering, customers can use the service to transfer up to CHF 100 (approximately EUR 66) per day between Postkonto account holders. Besides remittances, customers can use the service to check their account balances and their latest transaction on their accounts. Before approving transactions, PostFinance will check each transaction for the correct mobile phone number as well as the personal limit of the user. Registered recipients will receive an SMS after each money transfer is approved by the bank.

Type of service

Mobile Banking


103 - Mobile payment services and pilots

Type of technology

SMS

Domain

M – Payment

Secured through

4 digit PIN

Cost for usage

None

Partners

Financial: PostFinance

Additional information

Epay24 www.epark24.ch – Switzerland Short description

Swiss mobile payment service provider Epay24 has partnered with Swiss bank PostFinance to launch a mobile payment service for unmanned points of sale in the Bern region. With Epay24, merchants can accept payments made via the service PostFinance’s m-payments service ‘Handyzahlung Postfinance’. To offer the service, merchants need a valid bank account and an ePay 'residence' number, to which ePay links the payments from their customers. The service was launched in 2008 in Horgen at Zurichsee and has been extended to almost 100 locations across Switzerland. Epay24's mobile payment service focuses on unmanned points of sale for florists and growers of fruit and vegetables. To make a payment, customers call a free number, enter the location number and follow the spoken instructions.

Type of service

Mobile POS

Type of technology

Voice

Domain

M – Payment

Secured through

4 digit PIN

Cost for usage

None

Partners

Financial: PostFinance; Technology: Epay24

Additional information


Mobile payments 2010 - 104

AvantixMetro www.atosorigin.com/en-us/Newsroom/en-us/Press_Releases/2008/2008_07_10_01.htm United Kingdom Short description

IT services company Atos Origin has rolled out a mobile ticketing service for the Heathrow Express train network, between London Heathrowâ&#x20AC;&#x2122;s airport terminals and Paddington Station in Central London. Passengers on the Heathrow Express can now receive their tickets directly to a mobile phone or PDA. This is the first implementation of AvantixMetro, Atos Originâ&#x20AC;&#x2122;s mobile and e-ticketing service. Individual and corporate customers can now book tickets online, via the Heathrow Express website, and choose to receive either a bar-coded e-ticket that is stored on their mobile phones, or a self-print version of the ticket. These tickets are then scanned and validated on-board the Heathrow Express train, via a Casio IT-3000 terminal.

Type of service

Mobile ticketing

Type of technology

SMS

Domain

M-Delivery

Secured through

Lies outside the mobile phone

Cost for usage

Free

Partners

Atos Origin, AVANTIXMetro, Heathrow Express

Additional information

Launched July 2008

Potential

The service is convenient for the user. It is not a cost saver for Heathrow Express though. The cost of printing the e-tickets lay with the consumer, so it should be regarded as a free extra service from Heathrow Express.

Mobile theatre ticketing service United Kingdom Short description

Commercial mobile theatre ticket service. To access the mobile box office, O2 customers simply text LOTR to 2020 on their mobiles. The new service is delivered by Trinity Mobile on behalf of O2.


105 - Mobile payment services and pilots

Type of service

Mobile ticketing

Type of technology

SMS

Domain

M-Order

Secured through

Using a secure credit or debit card transaction over Trinity's Easy Ticket site within O2's Active Portal

Cost for usage

Free

Partners

Mobile Operator: O2 UK

Additional information

Monilink www.monilink.co.uk/mobile-banking - United Kingdom Short description

Ulster Bank has formed a joint venture with the UK ATM network operator Vocalink and mobile banking services provider Monitise to offer a mobile banking service. The customers of the Northern Ireland-based bank are enabled to access their account balance and view mini-statements on their mobile phone after a sign-up. In future, more services are to be added to this service.

Type of service

Mobile remittance

Type of technology

WAP / Internet

Domain

M-Banking

Secured through

Only a registered mobile phone linked to an account can be used to access account details, which are protected by the customer's personal PIN code. In order to increase security, no data is stored on the mobile device or on a server.

Cost for usage

Anytime Mobile Phone Banking & Text Services are free until the end of August 2008 as part of a special introductory offer. There are no data charges from your mobile network for registering, using or downloading Monilink with the exception of Orange and Virgin. For Orange and Virgin customers Monilink usage and download will be charged at your standard data tariff.

Partners

Monilink is a joint venture between Monitise Plc, a UK technology service company, and VocaLink who run the UK's ATM/SelfService network. Monilink is supported by 7 mobile operators in the UK ( T-Mobile, Orange, Vodafone, O2, 3, Tesco Mobile and


Mobile payments 2010 - 106

Virgin Mobile) Additional information

Monilink is UK's mobile banking network, providing banking customers with access to their financial information directly from their mobile handsets. With Monilink, customers can see their account balance in real time, view a mini statement detailing the last six transactions and add credit to up to five pay as you go mobile phones.

Payforit www.payforituk.com â&#x20AC;&#x201C; United Kingdom Short description

Orange, Vodafone, T-Mobile, 3 and O2 launched a payment system that allows subscribers to use the mobile phones to pay for low value purchases. Any purchases made will be charged directly to the monthly phone bill, or deducted from the prepaid credit.

Type of service

Mobile remittance

Type of technology

WAP / Internet

Domain

M-Order, M- Delivery , M-Payment

Secured through

None

Cost for usage

For downloads, as well as the price of the service the customer orders, browsing costs are charged in accordance with the mobile operator data tariff. No additional charges for the payment as such.

Partners

Mobile operators: Orange, Vodafone, T-Mobile, 3 and O2.

Additional information

First announced in March 2006, the Payforit scheme has been developed by the operators to promote a trustworthy and consistent standard for paying by mobile, so that consumers can buy with confidence when they are making one-off payments or setting up subscription services via their phone. Initially, Payforit will support micropayments (generally under GBP 10) for services purchased on mobile portals, providing a quick and simple billing option in the UK. From May 2007 Payforit has been extended to support web transactions also, opening up new revenue streams for many merchants. Payforit claims to provide access to over 52 million mobile phone users in the United Kingdom alone.


107 - Mobile payment services and pilots

Potential

For its niche (low value payments) this solution is not unique but very successful. Cooperation between MNOs adds to trustworthiness. The costs to merchants are very high, limiting its usefulness to low value, high margin products.

RingGo mobile www.ringgo.co.uk â&#x20AC;&#x201C; United Kingdom Short description

Business process services provider Cobalt introduces RingGo, a system that enables drivers to pay for their parking and top up their parking time by using their debit or credit card over the phone. The system also notifies users when the parking time is due to expire, by means of a text message.

Type of service

Mobile ticketing

Type of technology

Ringo uses voice calls for the ticketing service

Domain

M-Payment

Secured through

When the customer first uses RingGo, Cobalt will store some - but not all - of the credit card details in a secure data vault. The next time the customer uses the phone RingGo asks for some of the card information.

Cost for usage

GBP 0.20 â&#x20AC;&#x201C; GBP 0.30 on top of the parking fee.

Partners

VISA, Mastercard, Switch, Delta and Maestro Technology: Cobalt Telephone Technology

Additional information

In April 2009, RingGo registered 7,000 transactions in Oxford alone. The service is offered in 20+ localities, of which Oxford is the most important. A year ago, RingGo registered 1,500 transactions/month in Oxford.

Potential

Although the concept is good and user friendly, RingGo seems to have trouble convincing parking authorities to enable people to actually use the service. 7,000 transactions per month in the most important locality is not that impressive. The growth in transaction numbers is: it shows a rapidly growing awareness.


Mobile payments 2010 - 108

Trinity Mobile www.trinitymobile.co.uk/template2.asp?page=easyticket – United Kingdom Short description

Trinity Mobile provides Mobile Tickets, Mobile Coupons, Mobile Loyalty, Bulk Text, SMS To Email, Email To SMS and Multimedia Messaging services

Type of service

Mobile ticketing

Type of technology

SMS WAP

Domain

M-Delivery

Secured through

None

Cost for usage

Free

Partners Additional information

Trinity provides Mobile Ticketing services to other parties, like for Arriva and YourRail

MoBank www.mobank.co.uk/mobank/ - United Kingdom Short description

MoBank is a mobile banking service, which allows users to pay for purchases, check balances. The user can register one debit or credit card (Maestro, MasterCard, Visa or Visa Debit) to the MoBank account. The user needs to install a free application on the mobile phone in order to be able to use MoBank The service is currently only available on the i-Phone and works for only a couple of banks.

Type of service

Mobile POS, Mobile ticketing, Mobile banking

Type of technology

WAP/Internet

Domain

M – Payment

Secured through

4 – digit PIN

Cost for usage

Life time membership fee GBP 15 or GBP 0.50 per transaction, plus the MNO charges for data traffic while performing a transaction.


109 - Mobile payment services and pilots

Partners Additional information

Chance of success: only one phone, a few (big) banks, with Barclays you still have to type in your Barclays PIN next to your MoBank PIN – seems SO complicated – Many steps required to have a payment succeed. 0 chance

Atlas Interactive SMS Billing www.atlastelecommobile.com/ - Europe, Latin America Short description

With premium SMS, the consumer pays a pre-agreed rate for a service, like downloading a logo or ringtone. The payment either gets billed to a consumer’s monthly mobile phone bill or is deducted from the consumer’s pre-pay account.

Type of service

Mobile POS

Type of technology

SMS

Domain

M-Payment

Secured through

None

Cost for usage

No charge to the consumer, merchant pays an unknown fee to M(v)NO, but typically around 25% of the transacted amount.

Partners

Atlas Interactive

Additional

MO-Billing (MO = mobile originated) defines a billing process in

information

which the end- user types a SMS in his mobile phone and sends it to a certain short code. He will then be billed by the end of the month on his mobile operator's invoice for every SMS sent to the shortcode. MT-Billing (MT = mobile terminated) defines the reverse process of billing the end- user. In this message flow the end- user will be billed for every SMS he receives on his mobile after initiating the billing process with a free SMS MO. The amount billed is invoiced by the mobile network operator by the end of the month. In October 2008, Atlas Interactive launched its service in Argentina, Peru, Columbia, Venezuela, Mexico and Ecuador.

Potential

Premium SMS is the world’s most used form of mobile payment. The method is especially popular among merchants of and mobile online content.


Mobile payments 2010 - 110

7.2 North America Everyman Cinema Club mobile ticketing www.everymancinema.com â&#x20AC;&#x201C; Canada Short description

Everyman customers can buy mobi-tickets online at everymancinemaclub.com. Mobi-tickets are SMS text messages that contain a unique barcode and information about the film time, screen and seating. Customers have to present their mobitickets at the cinema where it is scanned by staff to allow entry to the film. Mobi-tickets can also double as vouchers or coupons that enable customers to purchase for food and drinks.

Type of service

Mobile ticketing

Type of technology

SMS

Domain

M-Delivery

Secured through

None

Cost for usage

None

Partners Additional information

RBC Mobex http://rbcmobex.com/ - Canada Short description

An RBC Mobex account is a stored value account that allows users to load funds from their bank account or from a credit card. Users can use it to send and receive money by mobile phone or via the internet and there are no minimum balances required. The service is specifically aimed at P2P payments. Users can send everyone (also non-subscribers) money via SMS, as long as the sender and recipient have a Canadian mobile phone number.

Type of service

Mobile remittance

Type of technology

SMS

Domain

M-Payment

Secured through

PIN


111 - Mobile payment services and pilots

Cost for usage

For the time of the pilot, no fees are incurred to the consumers.

Partners

Paybox

Additional information

Service highly similar to Rabo SMS betalen. Money can be sent to all Canadian mobile phones. In order to retrieve money, the recipient has to subscribe to the service. Users can keep track of their spendings online.

Potential

Transferring money electronically P2P costs money in Canada in contrast to some European countries. The costs of this service will therefore probably not be so much of an obstacle. The service is convenient, but requires a separate wallet to be set up, which could discourage consumers.

Zoompass Canada Short description

Zoompass is a Canadian mobile P2P remittance service. Consumers open a Zoompass account and link it to their credit card or bank account. They have to download a Java-based application to their cell phone in order to transfer money.

Type of service

Mobile remittance

Type of technology

WAP/Internet

Domain

Mobile Payments

Secured through Cost for usage

Opening an account and receiving funds are fee of charge. Sending costs CAD 0.50 or if linked to a credit card 3.5% of the total transaction amount.

Partners

EnStream, which is a joint venture between MNOs Telus, Bell Mobility and Rogers Communications

Additional information

America First Credit Union United States Short description

After downloading the mobile banking application to their phones, customers are able to see current balance information.


Mobile payments 2010 - 112

They have also access to their transaction history, they can pay bills electronically and transfer funds from one account to another within the same bank Payment of bills is possible to existing payees. New bill payees must be set up in the online banking environment. Logging into mobile banking requires a six-digit PIN. Activation of the service can only be initiated in the secure mobile banking environment. Type of service

Mobile remittance

Type of technology

WAP/Internet

Domain

M-Banking and M-Payment

Secured through

Six digit PIN on downloadable application Application downloadable via online banking account â&#x20AC;&#x201C; after login

Cost for usage

Wireless provider fee â&#x20AC;&#x201C; no fee for service as such

Partners

Firethorn

Additional information

America First Credit Union has 432,000 members. The service was announced in October 2007 and has been operational since March 2008. AFCU mobile banking is only available for carriers Alltel, AT&T and Verizon Wireless.

Arvest Mobile Banking United States Short description

After downloading the mobile banking application to their phones, customers are able to see current balance information. They have also access to their transaction history, they can pay bills electronically and transfer funds from one account to another within the same bank Payment of bills is possible to existing payees. New bill payees must be set up in the online banking environment. Logging into mobile banking requires a six-digit PIN. Activation of the service can only be initiated in the secure mobile banking environment.


113 - Mobile payment services and pilots

Type of service

Mobile remittance

Type of technology

WAP/Internet

Domain

M-Banking and M-Payment

Secured through

Six digit PIN on downloadable application Application downloadable via online banking account – after login

Cost for usage

Wireless provider fee – no fee for service as such

Partners

Firethorn and CheckFree

Additional information

Logging in requires a six-digit PIN. Only available for carriers alltel, at&t and Verizon wireless Activation of the service can only be initiated in the secure mobile banking environment. The service was announced in October 2007 and has been operational since April 2008.

BankCorp South, First Bank, Region’s Finance, SunTrust Banks, www.bancorpsouthonline.com/home/personal.checking.Mobile_Banking - United States Short description

Wachovia Mobile provides a safe and secure way for Online Banking customers to access eligible Wachovia accounts for free. Wachovia offers two ways to access accounts from a mobile device: through a mobile application or through an Internet enabled browser. The service of BankCorp South, First Bank, Region’s Finance and SunTrust Banks are exactly similar.

Type of service

Mobile remittance

Type of technology

WAP/Internet

Domain

M-Banking and M-Payment

Secured through

Six digit PIN on downloadable application Application downloadable via online banking account – after login

Cost for usage

Wireless provider fee – no fee for service as such

Partners

Firethorn

Additional information

Logging in requires a six-digit PIN. Activation of the service can only be initiated in the secure


Mobile payments 2010 - 114

mobile banking environment. The service is only available for carriers Alltel, AT&T, Cellular South and Verizon Wireless.

Bank of America 'Bank the Way you Live' www.bankofamerica.com/onlinebanking/index.cfm?template=mobile_banking â&#x20AC;&#x201C; United States Short description

Bank of America has launched the 'Bank the Way you Live' online banking micro site. The micro site features information on tools that allow its customers to control and manage their personal finances online, via mobile handset or smart phone.

Type of service

Mobile remittance

Type of technology

WAP/internet

Domain

M-Banking

Secured through

Personal information is protected by advanced encryption technology to prevent unauthorized access.

Cost for usage

Mobile Banking service is free. Customers will be charged mobile access rates.

Partners Additional information

With Mobile Banking from Bank of America, customers can use a mobile phone or smart phone to access balance information, pay bills, transfer funds and find nearby ATMs or banking centres.

Bank of Stockton www.bankofstockton.com/Main.aspx?TabID=14&PageID=106 â&#x20AC;&#x201C; United States Short description

Bank of Stockton provides its online banking customers with an additional channel to do their banking business: the mobile phone. The system is based on text messaging and users can check their balances, make transfers between own accounts and transfers between accounts of the same bank. Customers have to enrol to this service via their mobile banking account. Without such an account, enrolment is not possible.

Type of service

Mobile remittance


115 - Mobile payment services and pilots

Type of technology

SMS

Domain

M-Banking and M-Payment

Secured through

PIN number that has to be sent along with every command. Application downloadable via online banking account – after login

Cost for usage

Wireless provider fee – no fee for service as such

Partners

ClairMail

Additional information

Available on the major US mobile network operators: Alltel, AT&T, Boost, Cellular One, Nextel, Sprint, T-Mobile, US Cellular, Verizon and Virgin Mobile. The service is said to work regardless of carrier, manufacturer, operating system or wireless transmission standard.

Boku www.boku.com - United States Short description

Boku is a payment method for online purchases. Soon after launch of the service, Boku acquired competitors MobilCash and Paymo. At the merchant’s website, users click on the "Pay by Mobile" button and enter their phone number as well as their mobile provider. Once the purchase is made, the system sends an SMS asking for confirmation, to which the customer must reply by texting “Y” (for “yes”). The transaction is thus completed and the charge will be included in the monthly bill. No registration is required. Boku has closed agreements with 170 mobile carriers in 50 countries, reaching a potential market of 1.6 billion customers.

Type of service

Mobile payments

Type of technology

SMS, internet

Domain

Mobile payments

Secured through Cost for usage

Partners Additional information

Businesses pay 30%-40% of the transaction value. Consumers pay the price of a SMS.


Mobile payments 2010 - 116

Potential

Boku seems susceptible to fraud. A fraudster could enter a mobile phone number and then using a free online SMS spoofing service, spoof the confirmation SMS to Boku. Boku would not know the difference, and the real owner of that phone number would only detect the fraud at the end of the month when the bill comes in. Due to Bokuâ&#x20AC;&#x2122;s global reach, this could be a global fraud scheme and seriously harm the service.

Citibank mobile banking www.citibank.com/citimobile/ - United States Short description

Citi Mobile customers can review balances and transactions, transfers funds among accounts, pay bills, search for City branches and automated teller machine locations, or connect to Citiâ&#x20AC;&#x2122;s customer service centres.

Type of service

Mobile remittance

Type of technology

WAP / Internet

Domain

M-Banking

Secured through

PIN

Cost for usage

The service is for free although customers have to pay data download charges from the mobile operators.

Partners

Mobile operators: At7T, Cinhular Wireless, Sprint and Verizon The service is developed in conjunction with mFoundry, a aompany that specializes in mobile application development

Additional information

Citi Mobile service requires a registration of a specific phone and selection of a six-digit access code.

FirstBank's Mobile Banking www.efirstbank.com/internetbanking/mobile.html - United States Short description

FirstBank's Mobile Banking service: view account balances and transfer funds.

Type of service

Mobile remittance

Type of technology

WAP/internet

Domain

M-Banking


117 - Mobile payment services and pilots

Secured through

The mobile banking application is protected with two-factor authentication and encryption of offline storage. Mobile banking requires a 6-digit PIN to access the application. All data placed into local storage on the mobile phone is encrypted. This ensures that if the mobile phone is lost or stolen, the data stored locally for the mobile banking application is unreadable. For security purposes, mobile banking enrolment takes place within internet banking.

Cost for usage

FirstBank does not charge any fees for mobile banking. Connectivity and usage rates may apply.

Partners

US-based mobile operator: Verizon Wireless Firethorn offers the a m-banking service

Additional information

The service is based on a Firethorn application that utilises both PIN and device lock-out capabilities. Customers will need to register with their financial institution's online banking service in order to use this mobile banking service. The Firethorn app is available on several phones from Verizon Wireless, including the Chocolate and enV by LG, LG VX8700, LG VX8600, LGVX9400 and the Samsung SCH-a950. Firethorn also offers the m-banking service to customers of Wachovia, SunTrust and BancorpSouth.

Huntington Bank mobile Banking https://mobile.huntington.com - United States Short description

Huntington Mobile Banking offers three functionalities on the mobile phone: check balance, transfer money between own accounts, pay bills to existing payees and an ATM locator

Type of service

Mobile remittance

Type of technology

WAP/Internet

Domain

M-Banking and M-Payment

Secured through

Username â&#x20AC;&#x201C; password

Cost for usage

Wireless provider fee â&#x20AC;&#x201C; no fee for service as such

Partners Additional information

Huntington Bank has hit its annual mobile banking target in two months. Following its launch of mobile banking service in 30 June, Huntington hit eight times its monthly usage goal in July


Mobile payments 2010 - 118

and is about to exceed that by 40 percent in August. The bank reached its eight months target in the first four weeks after the service’s launch. Huntington has 1 million retail banking customers, of which 50 percent bank online. Huntington says its mobile banking service’s success is the effect of a marketing campaign, which includes ads on its home page, within its online banking section, on its ATMs and enclosed marketing material sent with paper statements. Huntington Bank is an USD 56.1 billion-asset regional bank based in Columbus, Ohio, US.

IBC Bank www.ibc.com/Personal-AccountFeatures.aspx?sSection=mobilebanking – United States Short description

US-based IBC Bank has activated a new mobile banking service called IBC Mobile which enables customers to conduct their business on their phones in either English or Spanish. After downloading the application to their phones, customers are able to see current balance information. They have also access to their transaction history, they can pay bills electronically and transfer funds from one IBC account to another. The service is compatible only with phones on the AT&T and Sprint networks and is provided by mobile financial services provider mFoundry. Payment of bills is possible to existing payees. New bill payees must be set up in the online banking environment.

Type of service

Mobile remittance

Type of technology

WAP/Internet

Domain

M-Banking and M-Payment

Secured through

Six digit PIN on downloadable application Application downloadable via online banking account – after login

Cost for usage

Wireless provider fee – no fee for service as such

Partners

mFoundry

Additional information

The service was activated in July 2008. Activation of the service can only be initiated in the secure mobile banking environment. The service is only available for carriers AT&T and Sprint.


119 - Mobile payment services and pilots

Mobiqa Venue Ticketing http://epnn.com/content/view/18559/489/ - US, Canada Short description

UK mobile technology company Mobiqa offers mobile ticketing in cooperation with US online tickets provider Tickets.com. Mobile ticketing will become available for events taking place at three venues in US and Canada: Times Union Center in Albany (US), KRock Centre in Kingston (Canada) and BOK Center in Tulsa (US). The arenas will begin delivering event tickets using the new Tickets@Phone ticket delivery method. On top of receiving their ticket onto their phone, customers of the three arenas also benefit from Tickets@Phone’s instant delivery. Venues’ customers can now buy mobi-tickets for the events taking place at the three venues from tickets.com. A mobi-ticket is generated and delivered directly to the customer's mobile phone in the form of a SMS. A mobi-ticket contains a unique 2D barcode message which is scanned at the entrance, as well as information about the event.

Type of service

Mobile ticketing

Type of technology

SMS

Domain

M-Delivery

Secured through

None

Cost for usage

Free of charge

Partners

Mobiqa, Tickets.com, K-Rock Center, BOK Center, Times Union Center

Additional information

The service was launched in October 2008

Mocapay www.mocapay.com – United states Short description

Mocapay is an integrated mobile payment and marketing platform allowing: “any consumer to link, any payment account to any mobile handset to transact at any point of sale system.” Any American consumer, that is. Mocapay users have to subscribe to Mocapay prior to being able to use the service. Mocapay is a wallet-based method. On POS, the user selects an account and receives a targeted


Mobile payments 2010 - 120

promotional message. The customer sends the secure pin and gets a Mocapay code, with an additional targeted promotional message. The customer gets a code back, and gives it to the cashier. After the transaction is completed, the customer gets a mobile receipt, and the money is deducted from his account. With that, he gets an additional targeted promotional message. Type of service

Mobile POS

Type of technology

SMS

Domain

M-Payment

Secured through

PIN

Cost for usage

Not disclosed

Partners Additional information

The service was launched in late 2006

Potential

It seems the consumer is overwhelmed with marketing messages from the service, but that could keep costs low. Putting gift and loyalty cards in a mobile wallet is a good idea from a consumer perspective. The phone is a ‘can’t leave home without’, whereas gift cards are easily forgotten. The redemption process is a bit complicated though.

Obopay www.obopay.com – United States Short description

Obopay is a peer-to-peer mobile payment company enabling cell phone users to send and receive money through their phones via a mobile web browser or SMS. Verizon Wireless is one of the mobile operators that have launched the Obopay Service. Money can be transferred to anyone with a mobile phone in the US

Type of service

Mobile remittance

Type of technology

SMS, WAP/Internet, IVR

Domain

Mobile payment

Secured through Cost for usage

Obopay charges a fee of USD 0.10 for sending money and a 2.5% charge for adding money from a debit or credit card, while


121 - Mobile payment services and pilots

linking to a bank account is free of charge. Partners

Most significantly, in 2009 Nokia invested in Obopay and began leveraging the Obopay platform for the Nokia Money service that offers financial services to mobile phone users.

Additional information

Obopay is a service that lets consumers and businesses purchase, pay, and transfer money through any mobile phone using Obopay's mobile application, text message, mobile Web, widget, or Obopay.com. Obopay works on any mobile phone and any mobile operators.

Potential

Payment BuyVoice www.planetpayment.com/MobileCommerce/paymentbuyvoice.aspx - United States Short description

Payment BuyVoice lets merchants accept credit cards anywhere, anytime - with the ease of voice and simplicity of any phone. No terminal is required; merchants can process payments using any telephone at hand. Registered merchants dial a BuyVoice toll-free number, inputting their identification number and unique pin number, provide customer zip code and sale amount and provide customer's credit card information. The natural speech application recites the payment authorisation code. The merchant also receives it via email or text message (SMS). The payments platform sends payments directly to the merchants bank account.

Type of service

Mobile POS

Type of technology

SMS / Voice

Domain

M-Payment

Secured through

None

Cost for usage

Not disclosed

Partners

Planet Payment

Additional information

The mobile phone is used as a payment terminal. After a test period, the method has been commercially available since June


Mobile payments 2010 - 122

2008. Potential

The service seems quite far-fetched. Payment procedure is complicated and far away from any existing payment experience. Also the delivery method of the confirmation code to the merchant does not create an optimal user experience from the merchant side of the equation.

PayPal Mobile www.paypalmobile.com - United States, Worldwide Short description

The mobile version of the well-known PayPal payment method. Consumers have to link a debit or credit card to their mobile phone number via PayPal in order to be able to make purchases or P2P payments. After every transaction initiation, the consumer is called back via an automatic voice response system, which asks for the PIN-code. After inserting the PIN, the transaction is validated.

Type of service

Mobile remittance

Type of technology

SMS, Automatic Voice Response, downloadable application

Domain

M-Payment, M-Order

Secured through

PIN code

Cost for usage

Private: none Business: 1.4% - 3.4% plus GBP 0.20, for receiving payments

Partners

PayPal, Sprint Nextel

Additional information

PayPal Mobile is available for person to person payments as well as POS-payments. Ordering is also possible: when a consumer sees an advertisement with a PayPal Mobile logo, he can send a text message to a number provided in the advertorial. After confirmation via PIN, the item is automatically sent to his address.

Potential

PayPal Mobile offers the online PayPal proposition to the mobile channel. For person to person payments, the service is more expensive than competing services like Obopay. On the other hand, PayPal already has a potential customer base of 150 million users who already have a PayPal account.


123 - Mobile payment services and pilots

P2P Cash www.p2pcash.com â&#x20AC;&#x201C; United States Short description

P2P Cash guarantees transfer of cash to any cellphone worldwide using a Secure Open Standard (SOS). The P2P Cash Secure Open Standard guarantees the transfer of cash between any two cellphones worldwide regardless of the carrier or communication network. STEP 1: Purchase a prepaid Debit card and load cash at convenience store in U.S., register cell phone and PIN # with P2PCash STEP 2: SEND Tel # of Recipient, Dollar amount ($100.00) and PIN and RECEIVE Confirmation number for Cash STEP 3: Present confirmation number at convenience store and receive cash in local currency

Type of service

Mobile remittance

Type of technology

SMS

Domain

M-Payment

Secured through

PIN

Cost for usage

not disclosed

Partners

none

Additional information

The service is only available for pre-paid mobile phones.

Synovus www.synovus.com/index.cfm?catid=1&subject=22 â&#x20AC;&#x201C; United States Short description

Synovus customers will have the ability to check account balances, transfer funds and view and pay bills from one seamless platform via cell phones or other mobile devices. Initially, Synovus will offer the mobile banking service to a subset of its customer base with a broader rollout planned for later in the year.

Type of service

Mobile remittance

Type of technology

WAP/Internet


Mobile payments 2010 - 124

Domain

M-Banking and M-Payment

Secured through

Six digit PIN on downloadable application Application downloadable via online banking account – after login

Cost for usage

Wireless provider fee – no fee for service as such

Partners

Firethorn

Additional information

The service was announced as early as November 2006. Activation of the service can only be initiated in the secure mobile banking environment. The service is only available for carriers AT&T and Verizon.

Wachovia Mobile www.wachovia.com/personal/page/0,,10_476_12583,00.html#application – United States Short description

Wachovia Mobile provides a safe and secure way for Online Banking customers to access eligible Wachovia accounts for free. Wachovia offers two ways to access your accounts from your mobile device: through a mobile application or through an Internet enabled browser.

Type of service

Mobile remittance

Type of technology

WAP/ Internet

Domain

M-Banking

Secured through

Username/password

Cost for usage

None

Partners

None

Additional information

The mobile banking application offers: viewing account balances and transactions; make one-time transfers between eligible accounts; make one-time bill payments; viewing eBills.

Wells Fargo Mobile www.wellsfargo.com/mobile/ - United States Short description

The Wells Fargo Mobile service enables you to connect to your eligible Wells Fargo accounts via the mobile web or text


125 - Mobile payment services and pilots

messaging (SMS) from your mobile phone or other handheld device. You can check account balances and review your recent account activity using the mobile browser or text messaging functions. You can also transfer funds using the browser function — all from your mobile phone or device. The Wells Fargo Mobile service provides access to any of your eligible Wells Fargo personal or small business deposit or credit accounts. You select which of your accounts you’d like to access from your mobile phone. Type of service

Mobile remittance

Type of technology

WAP/Internet

Domain

M-Banking and M-Payment

Secured through

Username password, as with online banking

Cost for usage

Wireless provider fee – no fee for service as such

Partners

None

Additional

Testing the service started in April 2007.

information

Activation of the service can only be initiated in the secure mobile banking environment. The remittance service is only available using the web browser. The text message service is only used for alerts and balance and history enquiries. Wells Fargo was the first bank to offer online banking accounts in 1995.

m-Via www.m-via.com/files/english/main.html – United States Short description

m-Via allows users to make international money transfers via any mobile phone from the US to Mexico, South America and the Phillipines using a concierge-type service. m-Via will only be sold via wireless retailers in the US starting from January. On top of mobile remittances, users will also be able to top-up their prepaid accounts as well as pay their bills.

Type of service

Mobile remittance

Type of technology

SMS


Mobile payments 2010 - 126

Domain

M – Payment

Secured through

Identification at cashing point

Cost for usage

Not disclosed yet

Partners

Not disclosed yet

Additional information

Commerce Bank mobile banking www.commercebank.com/personal/online-services/mobile-banking/ - United States Short description

The service enables its current online banking users to use webenabled handsets to view account balances, view recent transaction activity as well as transfer funds between personal checking, savings and money market Commerce Bank accounts. Users may also transfer funds from a personal deposit account to a Commerce Bank personal loan or credit card to make a payment. Moreover, clients can transfer funds from a personal line of credit to a personal deposit account.

Type of service

Mobile Banking

Type of technology

WAP/Internet

Domain

M – Payment

Secured through

Username and password

Cost for usage

Free

Partners

Bank: Commerce Bank

Additional information

The service is only available for customer who also participate in Commerce Bank online banking

SizzleMoney http://www.sizzlemoney.com – United States Short description

SizzleMoney is a mobile stored value product that enables mobile (cellular telephone) money access, payments and sharing. SizzleMoneyTM employs an SMS-based mobile technology that works on any cell phone and on most cellular networks. The


127 - Mobile payment services and pilots

product package includes a pin-based debit card for use at ATM’s and at retail establishments. SizzleMoney provides you with full mobile access to money and payment services, including: —

Person to Person Payments

Person to Merchant Payments

Money Sharing (Domestic & Foreign)

SizzleMoney Card-based transactions (retail purchases using pre-paid/re-loadable card & ATM transactions)

Type of service

Mobile POS, Mobile Remittance, Mobile Banking

Type of technology

SMS

Domain

M – Payment

Secured through

PIN

Cost for usage

A plethora of fees applies. Monthly fee of USD 0.99, making deposit USD 0.49, balance inquiry USD 0.99, ATM Withdrawal USD 1.49, overdraft fee USD 10.00, P2P payment USD 0.49 for both For a complete list: http://sizzlemoney.com/termscond/fees.pdf

Partners

Technology: Denarii Payments

Additional information

Zong http://www.zong.com/zong – United States Short description

Zong is a mobile payment method especially designed to pay online. The phone is used as the authorization method, and the amount spent is charged to the phone bill. Through merchants using Zong, consumers can pay with their mobiles for items such as games, avatars, virtual world goods, and applications for social networks or mobile devices. To make a purchase from an online merchant, users click on the logo and enter their phone number. Users then receive an SMS which contains a 4-digit one-timepassword (OTP). The user enters the OTP on the website and confirms the transaction. All purchases are added to the user’s mobile phone bill or deducted from the pre-paid credit.


Mobile payments 2010 - 128

Type of service

Mobile POS

Type of technology

SMS

Domain

M – Payment

Secured through

4 digit PIN

Cost for usage

None for consumers; for merchants: carriers take 25-45% of the transaction as fee. On top of that, Zong takes 5-10% of the transaction as a fee.

Partners Additional information

Zong claims the high fee (30 – 55% of transaction value) is justified because of the high conversion rates these kind of payments have. More people leave the sales funnel prematurely because of the difficulty of the payment method. Making this easy increases the share of people in the sales funnel that actually buys and pays for the product.

Eagle Eye Vouchering United States Short description

The Eagle Eye Vouchering service will enable retailers to issue mobile vouchers to customers (promotional, gift, and loyalty) either via standard SMS text messages or directly to NFC-enabled mobile phones. Retailers can use the Eagle Eye Mobile Interactive (Mi) Voucher Redemption System to identify and transact the vouchers. This will provide retailers with straight-through processing and campaign tracking, allowing them to create return- on-investment calculations. US NFC m-payments services provider ViVOtech and provider of mobile vouchers platforms Eagle Eye Solutions integrated their services in order to provide a mobile vouchering service for retailers.

Type of service

Mobile ticketing

Type of technology

NFC

Domain

M – Delivery

Secured through

None

Cost for usage

None for consumers, for retailers not dislosed


129 - Mobile payment services and pilots

Partners

ViVOtech and Eagle Eye Solutions

Additional information

Chase Mobile www.chase.com/index.jsp?pg_name=ccpmapp/shared/assets/page/Chase_Mobile_Banking – United States Short description

Chase offers its customers to perform banking activities any time anywhere. Is has been optimised for the phone's Web browser so one can bank anywhere the phone goes.

Type of service

Mobile banking

Type of technology

WAP/Internet

Domain

M – Payment

Secured through

PIN

Cost for usage

None

Partners Additional information

The service is only available for Internet-enabled mobile phones.

Zala www.azuremedia.com – United States and Europe Short description

Zala is a dual consumer-to-consumer and business-to-consumer application which leverages the BlackBerry Enterprise server (BES) and the BlackBerry Mobile Data System (BMDS). Zala is an application that uses the large Blackberry display and trackball navigation, enabling person-to-person transactions on a unified communication platform. Zala is designed to help corporate finance administrators to adjust ‘the controls’ on a Zala account including spending limits, restrictions, replenishment amounts and reimbursements.

Type of service

Mobile remittance (P2P) Mobile banking

Type of technology

WAP/Internet


Mobile payments 2010 - 130

Domain

M-Payment

Secured through Cost for usage Partners

Technology: mFoundry

Additional information

Zala positions itself as a turn-key modular, mobile financial services platform. It is a secure international, mobile money transfer service that can be used on a mobile phone and on the web. Zala is a virtual bank account that comes with a personalised Visa or Mastercard debit card that can be used for purchases or to access cash from thousands of ATM’s worldwide.

Eficash www.efici.net – United States, Latin America Short description

Eficash is a mobile based e-wallet service for banks and mobile operators in the US and Latin America. Eficash is a mobile application based on a pre-paid model that allows consumers to make and receive payments as well as manage bank accounts by linking their debit, credit card and bank accounts to their phone number. Users have to top up their Eficash accounts before making transactions and have access to their funds through the web or mobile phone. During transactions, the authentication of the user takes place via mobile phone number or user name and password. Users are also sent a confirmation message after each transaction via email or SMS based on user preferences. Clients can also use Eficash with phones with integrated cameras to interpret 2D codes and expedite payments.

Type of service

Mobile POS, Mobile Banking, Mobile Remittance

Type of technology

SMS, 2D

Domain

M – Payment, M-Delivery

Secured through

PIN

Cost for usage

Depends on operator

Partners

Technology: Efici

Additional


131 - Mobile payment services and pilots

information

7.3 Latin America Banco Francès Mobile Banking www.bancofrances.com/tlal/jsp/ar/esp/individu/servicios/bancamovil/index.jsp Argentina Short description

Banco Francs provides its online banking customers with an additional channel to do their banking business: the mobile phone. The system is based on text messaging and users can check their balances, make transfers between own accounts; monitor the progress of cheque processing, pay bills and transfers between accounts of Argentine banks. Customers have to enrol to this service via their mobile banking account. Without such an account, enrolment is not possible.

Type of service

Mobile remittance

Type of technology

SMS

Domain

M-Banking, M-Payment

Secured through

PIN

Cost for usage

Receiving alerts: ARS: 0.14 (EUR 0.03), for making transfers ARS 0.30 (EUR 0.07), both excluding taxes.

Partners

Banco Francès, Movistar Argentina

Additional information

The service was launched in February 2007

Banco Galicia Mobile Banking www.e-galicia.com/portal/site/eGalicia/menuitem.ac8b11d3a58b347fbdcfd986122011ca - Argentina Short description

Banco Galicia, an Argentine e-bank, offers it’s customers the possibility to do online banking business via their mobile phone. First, consumers have to subscribe to the service by attaching their mobile phone to their online bank account. This must be done in the customers’ online banking environment (after logging in). A link to an application will be sent to the registered phone,


Mobile payments 2010 - 132

along with an 8-digit password. After downloading the link, customers can access mobile banking via an 8 digit password on their mobile phone application. Type of service

Mobile remittance

Type of technology

Internet

Domain

M-Banking, M-Payment

Secured through

Username/password (8 digits)

Cost for usage

None, extra service to online banking customers

Partners

Banca Galicia, America Movil

Additional information

The service was launched in 2006

Banco Río www.santanderrio.com.ar/individuos/canales_mobilebanking_ppal_1.jsp - Argentina Short description

The SMS banking service permits customers to manage their bank account via their mobile phone. By sending a text message, customers can make payments, money transfers and check the balance of their account(s). For mobile banking, one needs an online banking account at Santander Río bank and a cellphone capable of sending and receiving text messages.

Type of service

Mobile remittance

Type of technology

SMS

Domain

M-Banking, M-Payment

Secured through

Username/password (8 digits)

Cost for usage

Depends on the mobile network operator. For Personal customers, receiving SMS is free, sending an SMS costs ARP 0.35 (EUR 0.09) excluding taxes. For Movistar customers, both incoming and outgoing Río SMS cost ARP 0.15 (EUR 0.04).

Partners

Banca Galicia, Movistar, Personal

Additional information

The service was launched in 2006


133 - Mobile payment services and pilots

M-Cash http://mcash.com.br – Brasil Short description

M-Cash enables clients to purchase products in retail stores with the mobile phone or through the Internet.

Type of service

Mobile POS

Type of technology

SMS

Domain

M-Payment

Secured through

Unknown

Cost for usage

Unknown

Partners

The initiative has been launched in partnership with the company M-Cash and Albatroz Participações (a private equity firm).

Additional information

In November 2006, HSBC bank launched in Brazil a service called M-Cash. The technology offers automatic debit from the client's current account, with no additional cost and is compatible with a wide range of standards including GSM, CDMA and TDMA for mobile telecommunications and SMS, WAP, USSD and IP/XML for data applications. Currently, approximately 10,000 HSBC account holders use the service but M-Cash management expects it to account for 3% of all electronic transactions by 2009.

Oi Paggo www.novaoi.com.br – Brazil Short description

Oi Paggo is a credit system that allows clients to shop through their cell phones via SMS.

Type of service

Mobile remittance, Mobile POS

Type of technology

SMS

Domain

M-Payment

Secured through

A personal password is used to authorise the transaction.

Cost for usage

Client does not pay annual fee but the client does pay BRL 2.99 (EUR 1.00) on the months he/she utilises the service. There is no SMS cost and the short messages sent for the transactions do not consume pre-paid cell credits.

Partners

Mobile operator Oi, processor; BrasPag


Mobile payments 2010 - 134

Paggo, the company that operates the payment system Additional information

Oi Paggo was launched in February 2006 by Oi, a mobile operator in Brazil, in association with Paggo, a small technology company. In April this year, Oi Paggo had 1 million customers using the service at some 40,000 merchants. The service signs up about 6,000 to 7,000 customers each day.

Potential

Although the monthly fee seems high, there is a definite need for the service in Brazil. Mobile remittance is a service especially used by unbanked people. Many of Brazilâ&#x20AC;&#x2122;s 200 million inhabitants are unbanked, creating a perfectly feasible market for the service. The fact that more than 40,000 merchants also accept this means of payment, is almost unprecedented.

Samba 38 www.samba38.com - Brazil Short description

Brazilian company Samba38 Tecnologia e Servicos offers an SMSbased service which allows consumers to top-up prepaid mobile phone accounts as well as make mobile payments. The service was developed by Brazilian company Alimutu Technologies Management . In order to gain access to the mobile payment service, customers can apply for the Samba38 debit or credit card Private Label Samba38 (mobile phone and plastic). If the application is approved, the customer receives a small credit directly available in Samba38 credits which can be used via a mobile telephone to make payments. This service is made possible through business agreements with Samba38's financial partners. Point of sales that accept Samba38 payments can use their Samba38 credits to pay other bills along the purchase/distribution chain. The service will be used by wireless operators in Brazil covering over 60 percent of the mobile payments market. The service offers prizes to frequent users.

Type of service

Mobile POS

Type of technology

SMS


135 - Mobile payment services and pilots

Domain

M â&#x20AC;&#x201C; Payment

Secured through

Not disclosed (website offline)

Cost for usage

Not disclosed (website offline)

Partners

Technology: Alimutu, MNOs: Claro, CTBC, Oi, Sercomtel, Telemig, TIM and Vivo

Additional information

Visa Paywave Guatemala Guatemala Short description

Users will be able to pay with their mobile by waving their phone in front of terminals installed in fast food restaurants and cinemas participating in the trial. The 6-month pilot was developed in partnership with Compania de Procesamiento de Medios de Pago (Visanet Guatemala), Industrial Bank and Uno Bank and is expected to include around 200 Visa cardholders. The pilot is the first Visa payWave trial in Latin America and the Caribbean and the company plans to launch future pilots, to provide value-added functions, including mobile account management, as well as mobile alerts and coupons.

Type of service

Mobile POS

Type of technology

NFC

Domain

M-Payment

Secured through Cost for usage

No charge to the consumer, merchant pays an unknown fee

Partners

Uno Bank, Industrial Bank, Visanet

Additional information

The pilot is only available in selected fast-food restaurants and cinamas. Only 200 cardholders are invited to participate. The pilot was announced in October 2008.

Potential

With widespread adoption of NFC-enabled phones still years away the future of NFC-based mobile payments in Guatemala does not look too bright. Merchants and consumers will have to be heavily incentivised in order to get them aboard for a commercial rollout â&#x20AC;&#x201C; but then the business case is not viable.


Mobile payments 2010 - 136

Pago Movil Peru Short description

Pago Movil is a POS mobile payments service enabling VISA card holders to pay by making a call from their mobile phone. Once registered, users can pay by calling the *98 short number and typing in the unique code and amount of the purchase. Visanet then sends a SMS to the buyer's and the seller's mobile phones, to confirm the purchase has been charged to the Visa card.

Type of service

Mobile payments

Type of technology

Call

Domain

Mobile POS

Secured through Cost for usage Partners

Movistar, Visanet

Additional information

Diemo www.diemo.mann-india.com/english/index.html - Venezuela Short description

Venezuelan start-up company Diemo has teamed with provider of service to MVNOs XIUS-bcgi, a division of Megasoft, to launch mobile banking with GSM network provider Digitel. Diemo is short for Dinero en Movemiento (Money on the move). Subscribers need to download an application onto their mobile telephone. With the application, subscribers can pay bills, make money transfers and withdrawals using their Diemo wallet.

Type of service

Mobile banking

Type of technology

SMS

Domain

M-Payment

Secured through

PIN

Cost for usage

Not disclosed, section of the site offline.


137 - Mobile payment services and pilots

Partners

XIUS-bcgi, Digitel

Additional information

The service was launched in August 2008 Diemo has signed with XIUS-bcgi for a three-year, USD 15 million contract to provide mobile banking and related services in South America and elsewhere. XIUS-bcgi is to provide security software for the service, client software for each mobile phone and network support.

Potential

The mobile banking service is completely new service on the market in Venezuela. Most of its citizens are unbanked, but mobile phone penetration is about 75%. This service really fulfils a market need.

7.4 Middle East and Asia M-Paisa Afghanistan Short description

Vodafone and Afghan mobile operator Roshan have launched a mobile payment system. M-Paisa, is built on Vodafone's M-Pesa service in Kenya. At launch the Afghan service will, however, have a significantly different focus from the Kenyan version. Initially M-Paisa will act as a vehicle for microfinance institutions' (MFI) loan disbursements and repayments, with an additional range of business to business. Consumer person-to-person transactions will also be available, enabling those MFI clients and employees who have received their money via M-Paisa, to use the service.

Type of service

Mobile remittance

Type of technology

Voice. Roshan and Vodafone are trailing interactive voice recognition services which, when launched later in the year, will enable greater use of M-Paisa by consumers who might otherwise be excluded due to high illiteracy rates in Afghanistan

Domain

M-Payment

Secured through Cost for usage Partners


Mobile payments 2010 - 138

Additional information

M-Paisa will be used by organisations such as Afghanistan's The First MicroFinanceBank and FINCA a global microfinance institutions.

Potential

Although the use of the mobile phone for financial services becomes increasingly popular in third world, the M-Paisa service has a very narrow scope. Also the illiteracy rate in Afghanistan can constitute a problem.

SMART MTC Bahrain Short description

Bahra and Smart work in partnership with MTC Vodafone Bahrain and a leading bank in the Middle East. Through the Smart Services Hub, Filipino migrants and contract workers can remit funds back to the Philippines using their mobile phones. Smart also sees the need for a global hub that will be interoperable with the Smart Services Hub. As part of the GSMA program, Smart plans to launch a pilot project with MasterCard as an authorisation, clearing and settlement partner.

Type of service

Mobile remittance

Type of technology

SMS

Domain

M-Payment

Secured through

Codeword for confirmation

Cost for usage

Not disclosed

Partners

Smart, MTC Vodafone, MasterCard

Additional information

The initiative was announced in February 2007

Potential

Filipino migrant workers in Bahrain typically do not have a bank account in Bahrain, as for the most part, they are paid out in cash. A bank transfer to send money home is therefore out of the question. Mobile money transfer therefore is a good alternative.

SSL Wireless Bangladesh Short description

SSL SMS Banking is a service that enables Bank's customers to


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access their accounts through SMS. SSL SMS Banking allows Bank’s customers to access information and perform certain transactions on their account by using their mobile phone to send SMS in a predefined format to assigned short codes like 6969 for example. The possibilities are: Account balance enquiry, customer notifications, mini statement requests, order for money transfer from customer’s one account to another within the bank, pay utility bills by customer’s mobile phone. Type of service

Mobile remittance

Type of technology

SMS

Domain

M-Banking

Secured through

PIN

Cost for usage

Not disclosed

Partners

SSL Wireless, Islami Bank, Grameenphone, Aktel, Banglalink, Warid Telecom, CityCell and TeleTalk.

Additional

The service was launched in August 2008.

information

Potential

Bangladeshi Mobile services provider SSL Wireless and Islami Bank Bangladesh, a private banking and financial institution in Bangladesh, have signed an agreement to provide mobile banking services in Bangladesh for all the major telecommunication services providers, including Grameenphone, Aktel, Banglalink, Warid Telecom, CityCell and TeleTalk. The service is an additional channel to the yet existing banking channel. Just like American mobile banking methods, it just offers services via an additional channel, but the Bangla Deshi method is not for free – a major inhibitor.

Wing Money www.wingmoney.com/en/company-profile - Cambodia Short description

WING is a mobile phone enabled payment service that allows customers and businesses to transfer, deposit and withdraw money between each other via their mobile phones. The Cambodian initiative was launched by ANZ Banking group and is


Mobile payments 2010 - 140

based on SMS technology. Customers can use the WING Cash Xpress to cash in or cash out as well as to purchase goods and services. WING is targeting those Cambodian customers who are generally un-banked, but nevertheless have important financial service needs. Type of service

Mobile POS, Mobile banking

Type of technology

SMS

Domain

M – Payment

Secured through

4 – digit PIN

Cost for usage Partners Additional information

EasiRemit www.chinaunionpay.com – China and Singapore Short description

OCBC Bank and China Unionpay collaboration on remittance. EasiRemit, a new remittance service available via OCBC Mobile Banking as well as OCBC ATMs is the first real-time remittance service to China and OCBC Bank is also the first and only bank in Singapore to tie up with CUP to offer such a remittance service.

Type of service

Mobile remittance

Type of technology

SMS

Domain

M-Banking

Secured through Cost for usage

Not disclosed

Partners

OCBC Bank / China Unionpay is the only National Bankcard Association in China. EasiRemit will be launched with four CUP member banks namely Bank of Shanghai, Dongguan Rural Credit Cooperatives Union, Fujian Rural Credit Union and Hunan Rural Credit Union.

Additional information

The beneficiary also enjoys the convenience of having the money credited immediately to his bank account in China, instead of the usual three to five days’ waiting time that conventional


141 - Mobile payment services and pilots

remittance services typically require.

Potential

With a large Chinese community in Singapore, bridging the Singapore - Chinese remittance gap. It is the first real time service in its kind. The costs associated with this service are not disclosed yet, but if it is in the range of traditional methods, it has a valuable competitive advantage is high reach and real time transfers.

UMPay www.umpay.com/englishumpay/index.htm – China Short description

UMPay offers financial institutions in China a mobile payments platform allowing for several mobile payments options. These options include: micropay (charged to the telephone bill), prepaid mobile wallet, NFC-based POS payments

Type of service

Mobile remittance, Mobile POS

Type of technology

SMS, USSD, WAP/Internet, IVR, NFC

Domain

M – Payment, M - Banking

Secured through

PIN

Cost for usage

Depends on technology used and financial services provider

Partners

MNO: China Mobile, Financial: China Union Pay, Participating banks: 19, a.o.: Bank of China, Agricultural Bank of China, Construction Bank of China, Bank of Communications, HSBC

Additional

The service ONLY works for China Mobile subscribers – over 450

information

million in number. The different UMPay services claim to have an aggregated amount of 100 million users. The Chinese m-payment market is dominated by UMPay, a joint venture between an inter-bank credit card organisation China UnionPay and mobile operator China Mobile, the world's biggest mobile carrier in terms of subscriber numbers (415 million customers). Since it was launched in 2004, UMPay’s main mobile payment service has reached over 40 million registered users, including inactive accounts.


Mobile payments 2010 - 142

Ali M-Pay www.alipay.com – China Short description

Chinese online payment services provider Alipay and MNO China Mobile enable China Mobile users in the Zhejiang province to carry out m-payments for items such as new handsets or text message news updates. The service was launched, following more than a year of internal testing. Alipay has closed a similar deal with another Chinese carrier China Telecom. In order to make m-payments via Alipay, users will need to link their mobile number to their Alipay accounts and configure their mobile payment service. By sending SMS commands to a specific number, mobile phone users will be able to make transfers and buy goods of up to CNY 200 (approximately EUR 22) per transaction.

Type of service

Mobile POS

Type of technology

SMS

Domain

M – Payment

Secured through

4 digit PIN

Cost for usage

None

Partners

Alipay, China Mobile

Additional information mChek www.mchek.com - India Short description

mChek is a broad mobile payments solution linked to the consumer’s credit or debit card that can be used for remote as well as point of sale mobile payments as well as mobile remittance.

Type of service

Mobile POS, mobile remittance

Type of technology

SMS. WAP

Domain

M-Payment

Secured through

User PIN


143 - Mobile payment services and pilots

Cost for usage

Free

Partners Additional information

Obopay India India Short description

Mobile P2P money transfer and remittance services provider Obopay has signed up with six banks and three mobile phone providers for its formal entry into the Indian market.

Type of service

Mobile remittance

Type of technology

SMS, WAP/Internet

Domain

M-Banking

Secured through

MPIN (mobile PIN)

Cost for usage

None

Partners

The banks that have currently tied up with Obopay are, Kotak Mahindra Bank (KBL), Development Credit Bank (DCB), and Yes Bank (YES).

Additional information

Oxicash SmsPay www.oxicash.in – India Short description

OxiCash enables users to buy recharge PINs for a multitude of services such as Prepaid Mobile Phones, Tata sky and DishTV recharge coupons, Telephones, Electricity and Water bill payments, Air –Rail –Bus tickets, shop online for apparels, etc. OxiCash users can also pay in remote places without GPRS. Oxicash acts as a prepaid wallet. The amount will get debited from your OxiCash wallet and credited in favour of the Merchant. Both the subscriber and the Merchant will get confirmatory SMS messages from OxiCash with


Mobile payments 2010 - 144

transaction details and amount. Type of service

Mobile remittance, Mobile POS

Type of technology

SMS

Domain

M-Payment

Secured through

User PIN

Cost for usage

Free for consumer, merchant charges not disclosed

Partners

Oxigen

Additional information

The service started in July 2008.

Potential

Why use mobile payments in a cash-based society if you can pay by cash? Why accept these payments if it costs you more than accepting cash? The system works perfectly fine for online transaction, but at the POS, mobile payments in a country that has not yet gotten used to cards, might very well be a bridge too far.

Oxicash plans to distribute these services to Oxigenâ&#x20AC;&#x2122;s pan-India retail network of approximately 50,000 touch points, which is expected to expand to 250,000 by 2010.

State Bank of India mobile banking http://www.statebankofindia.com/viewsection.jsp?lang=0&id=0,1,21,691 â&#x20AC;&#x201C; India Short description

In the process of providing banking facilities in un-banked regions of India, Airtel and State Bank of India pilot a project in the Himalayan village of Pithoragarh. In June 2008, this pilot was turned into a national roll-out.

Type of service

Mobile remittance

Type of technology

SMS

Domain

M-Banking

Secured through

PIN

Cost for usage

Not disclosed

Partners

Airtel, State Bank of India, Spanco Telesystems

Additional information

Three wrong MPIN entries will block the MBS to the account for the day and two consecutive blockages will remove the data from the mobile banking application in the handset. The customer will


145 - Mobile payment services and pilots

have to re-register for the service following the registration process explained above, should he/she desire to continue to avail the services from the State Bank of India. The upper ceiling per transaction limit shall be Rs. 5000.00 (EUR 100) within an overall calendar month limit of Rs. 25,000.00. (EUR 500)

Pay Anyone www.yesbank.in - India Short description

Pay Anyone is a cooperation between Yes Bank and American Obopay. Pay Anyone enables Yes Bank customers to transfer money between Yes Bank accounts as well as between Yes Bank accounts and other banks’ accounts through their mobile phones. On top of money transfers, the new service enables users to book tickets and pay for mobile top-ups, among others. At present, the bank offers its clients a mobile payment service called 'Person to Person', which gives Yes Bank customers the possibility to send money only between Yes Bank accounts through Obopay’s mobile payment service. Yes Bank currently has 5,000 customers who are using the bank’s mobile payment services throughout the country.

Type of service

Mobile Banking, Mobile Remittance

Type of technology

SMS

Domain

M – Payment

Secured through

Username and password

Cost for usage

Free during trial – remittances against a fee, not disclosed

Partners

Bank: Yesbank; Technology: Obopay

Additional information

Citi NFC trial Bangalore India Short description

An NFC trial where trial users are equipped with NFC-enabled phones to make purchases and to pay for public transport. The


Mobile payments 2010 - 146

trial started in April 2009. Citi Group’s aim is to collect enough data on consumers’ use of mobile phones ready for contactless payments to demonstrate to handset manufacturers and carriers that including NFC in phones would be worth the investment. Type of service

Mobile POS, Mobile ticketing

Type of technology

NFC

Domain

M – Payment, M-Delivery

Secured through

Embedded

Cost for usage

Openi

Partners

Bank: Citigroup

Additional information

Citibank M-Banking India www.online.citibank.co.in - India Short description

The Citibank M-Banking India solution allows customers to view account details, transfer funds, pay bills and make requests. To use Citi Mobile banking service, the customer needs a javaenabled mobile phone with a GPRS connection. Citi Mobile works with the customers’ 16-digit debit/credit card number and existing IPIN. The service is free of charge. The application can be downloaded by sending an SMS.

Type of service

Mobile Banking

Type of technology

WAP/Internet

Domain

M – Payment

Secured through

PIN

Cost for usage

None

Partners

Bank: Citigroup

Additional information


147 - Mobile payment services and pilots

PayMate India www.paymate.co.in – India, Nepal, Sri Lanka Short description

Indian mobile payments provider PayMate enables its clients to send and receive money, pay for retail purchases, monthly utility bills, flight & movie tickets. Upon registration, a consumer has to link his PayMate account to a bank account or credit card. After that, he will receive a fourdigit PIN, which is used to authorise transactions. PayMate can be used with online and offline merchants. After initiating a transaction, the end user receives a call back from an automated IVR, requesting a PIN. After a successful PIN entry, the user gets a confirmation SMS which completes the purchase. The system can also be used to pay bills. Via PayBill’s SMS-based service, subscribers are able to pay utility bills, pay for movie and flight tickets and make person-to-person money transfers.

Type of service

Mobile POS

Type of technology

Call/Voice and SMS (confirmation)

Domain

M – Payment

Secured through

4 digit PIN

Cost for usage

None for end consumer

Partners

MNOs: MNO-independent in India. Nepal: Nepal Telecom Banks: Bank of Ceylon (Sri Lanka), Everest Bank (Nepal), 14 banks in India

Additional

The transaction limit is IRS 2,000 (EUR 30). Paymate plans to add

information

P2P remittance to the service. The service is available for customers of 14 banks in India, 1 bank in Sri Lanka and 1 in Nepal. The service can be used to pay online as well as to pay at 13,000 merchants on the Indian subcontinent.

FeliCa Mobile www.nttdocomo.com – Japan Short description

The Osaifu mobile phone can be used as a wallet, credit card, ID card or a key to the home. Users can check their credit balance, point totals, and purchase history on the mobile phone screen,


Mobile payments 2010 - 148

and use the i-mode network to add e-money credit, download tickets, or pay for products and services. There are discount bonus points and other special privileges exclusively for OsaifuKeitai-users. Type of service

Mobile ticketing, mobile POS

Type of technology

NFC

Domain

M-Payment

Secured through

SIM

Cost for usage Partners

NTT DoCoMo’s

Additional information

Osaifu-Keitai mobile phones equipped with FeliCa contactless IC chips. FeliCa is a contactless IC card technology developed by Sony Corporation. In addition to facilitating remote payments, the NTT DoCoMo phones enable consumers to use their devices as a substitute for cash and cards at vending machines and merchants’ points of sale. The Mobile Suica application can be used to pass through automatic ticket gates at train stations. Mobile Suica also works as e-money for purchases at stores.

KDDI au's Osaifu-Keitai ‘EZ Felica’ www.kddi.com/english/value/au/index.html - Japan Short description

'Osaifu Keitai', is a service compatible with 'EZ FeliCa'. The mobile phone service ‘EZ FeliCa’ uses ‘FeliCa’ non-contact IC card technology for applications such as ‘QUICPay’ mobile credit, ‘Edy’ electronic money, and East Japan Railway's ‘Mobile Suica’ fare collection service, turning KDDI au mobile phones into mobile wallets.

Type of service

Mobile ticketing

Type of technology

NFC

Domain

M-Payments

Secured through

Embedded

Cost for usage Partners Additional

The number of subscribers to au 'Osaifu Keitai', 'EZ FeliCa',


149 - Mobile payment services and pilots

information

exceeded 10 million on November 25 2007. 'EZ FeliCa' is a service that can be used in a variety of situations, such as the purchase of train tickets and commuter passes, or as e-money, credit cards, and membership verification. At 'EZ FeliCa site', users can check out information related to 'Osaifu Keitai', and conduct location-based searches for shops which provide the 'Osaifu Keitai' service. KDDI will actively continue to expand services for 'EZ FeliCa' to meet the diverse needs of customers.

Shinginko Japan Short description

Shinginko (formerly known under the name of the pilot Jibun) offers banking services through three channels: mobile (through KDDI's au, NTT DoCoMo, and Softbank), internet, and phone (IVR/operator) banking. Users will be able to make payments to the accounts of anyone in their mobile phoneâ&#x20AC;&#x2122;s address book, as well as shop online with their handsets. In the future, the service will include foreign currency deposits, credit card services and insurance offerings. The company has been accepting applications since August 2008.

Type of service

Mobile remittance

Type of technology

WAP/Internet

Domain

M-Banking, M-Payment

Secured through

Username/password

Cost for usage

Transfers between two Shinginko accounts or between a Shinginko bank account and Bank of Tokyo-Mitsubishi UFJ account are free of charge

Partners

Bank of Tokyo-Mitsubishi UFJ, KDDI telecom

Additional information

The aim is to reach 2.4 million account holders by the third year, and 3.4 million in the fifth year as well as JPY 1.5 trillion (EUR 10.7 billion) in deposits. In June 2008, Bank of Tokyo-Mitsubishi UFJ and telecoms operator KDDI announced that their mobile internet banking joint venture has been licensed by Japanâ&#x20AC;&#x2122;s Financial Services Agency. The New Bank (Shinginko in Japanese, meaning 'New Bank'), offers a full line-up of financial services oriented to individual


Mobile payments 2010 - 150

consumers, capitalising on the strengths of the mobile phone.

S! FeliCa http://mb.softbank.jp/mb/en/service/advanced/sfelica/ - Japan Short description

S! FeliCa’ is a ‘Osaifu-Keitai’ (mobile wallet) service that lets customers use their handsets in a variety of ways, such as for transportation and commutation ticketing, electronic money shopping, credit card, membership card and point card services.

Type of service

Mobile ticketing

Type of technology

NFC

Domain

Mobile payment

Secured through

Embedded

Cost for usage Partners

Softbank

Additional information

Viva M-Pay Kuwait Short description

Viva offers users access to services such as top-up, bill payments, money transfers, mobile banking and international remittances. The service will be available in Arabic and English directly to Viva subscribers as well as via authorised dealers. The service is based on SMS technology.

Type of service

Mobile banking, mobile remittance

Type of technology

SMS

Domain

M – Payment

Secured through

Username – password

Cost for usage

Opening account is free of charge, other fees not disclosed

Partners

MNO: Kuwait Telecom Company; Technology: Macalla, Turnkey Technologies

Additional


151 - Mobile payment services and pilots

information

DiGi Remit www.digi.com/my - Malaysia Short description

To transfer money from Malaysia to Bangladesh, Indonesia and the Philippines via SMS. DiGi updates both sender and receiver via SMS on each transaction.

Type of service

Mobile remittance

Type of technology

SMS

Domain

M-Payment

Secured through

PIN

Cost for usage

The fee starts at MYR 8 (EUR 1.64) for all the three countries, depending on the mode of delivery in the receiving end.

Partners

Citibank

Additional information

The service was launched in October 2007 with Citibank. With two text messages users can complete a transfer. Digi Remit wallets can be topped up at authorised outlets across Malaysia or via Giro transfer from any bank account. Remittances can be sent to anyone in the destination countries, with or without bank account. The signing up takes one day.

Potential

The service competes with traditional remittance services like bank transfers and Western Union. The fees for DiGi Remit are slightly lower than traditional remittance services and have a higher reach, especially on the recipients side than bank transfers.

Mobile Visa Wave Payment Malaysia Short description

In the pilot, participants will be issued with a Nokia 3220 phone pre-programmed with their regular Maybankard Visa Wave card information. It operates as a standard mobile phone connected to the Maxis network, but with the built-in Visa Wave function, it can also be used to wave and pay at Visa Wave merchants.


Mobile payments 2010 - 152

Visa Wave is EMV-based and uses the strongest EMV authentication - dynamic data authentication (DDA) - for all transactions. Mobile Visa Wave payment in Malaysia combines NFC (near field communications) with Visa Wave contactless card technologies, building on the existing contactless platform, which amounts to 2,500 outlets and 160,000 cards, with five issuers and four acquirers of Visa Wave transactions Type of service

Mobile POS

Type of technology

NFC

Domain

M-Payment

Secured through

PIN (not always needed)

Cost for usage

User: none, merchant: credit card charge

Partners

Maybank, Maxis Communications, Visa

Additional information

Launched April 2006

Potential

A large-scale NFC initiative, aimed at a tech-savvy nation. Mobile phones in countries like Malaysia, Singapore, Japan, South Korea and Taiwan play a far greater role in every-day life than in Europe and North America. This enhances adoption. Also, Malaysians (at least those living in Kuala Lumpur) are already used to NFC cards for they use it in public transport of the capital.

OneSMART PayPass Malaysia Short description

OneSMART MasterCard PayPass is the industry’s first internationally accepted contactless EMV payment solution, in Malaysia. PayPass combines both contact and contactless interfaces on one chip, enabling regions where EMV smart cards predominate, such as the Asia/Pacific, to reap the speed and convenience benefits offered by contactless payments. OneSMART PayPass provides Malaysians with a fast and convenient way to pay for their small everyday purchases. PayPass allows cardholders to “tap & go” at merchant outlets around the world that are equipped with PayPass readers.


153 - Mobile payment services and pilots

The system is globally interoperable with other PayPass systems. PayPass subscribers from other nations can use the Malaysian system too. Type of service

Mobile POS

Type of technology

NFC

Domain

M-Payment

Secured through

PIN (not required for each transaction)

Cost for usage

No charge for the consumer. Merchant charge not dislosed

Partners

MasterCard, Smart Card Alliance

Additional information

The payment method was launched in February 2006 in Malaysia PayPass transactions are said to be just as safe as traditional payment card transactions.

Maxis FastTap www.maxis.com.my – Malaysia Short description

Malaysian mobile operator Maxis, Nokia, Maybank and Visa have launched the Maxis FastTap NFC m-payment service. As part of the service, Maxis offers its customers the Visa payWave –enabled Nokia 6212 classic handsets. To access the service, Maybank Visa account holders need to download their Visa payWave credit account details to their Nokia 6212 classic handset over the Maxis wireless network. Once the account has been personalised on the phone, account holders can make purchases at any of the 1,800 merchant outlets that currently accept Visa payWave in Malaysia. The contactless chip embedded in the device also powers a number of additional functions, including a contactless transit application. This feature enables Malaysian commuters to pay for charges while using metropolitan transit systems, bus terminals, highway toll gates and car park facilities at more than 3,000 contactless payment touch points throughout Malaysia.

Type of service

Mobile POS, Mobile Ticketing

Type of technology

NFC

Domain

M – Payment


Mobile payments 2010 - 154

Secured through

SIM

Cost for usage

None during trial

Partners

MNO: Maxis; Financial: Maybank, Visa; Other: Nokia

Additional information

XacBank Mobile Banking http://technology.cgap.org/category/projects/mongolia-xacbank/ - Mongolia Short description

XacBank, a provider of development finance in Mongolia, has partnered with global microfinance body CGAP to launch a new mobile phone banking service. XacBank expects the service to reach out to as many as 300,000 Mongolians (out of 2 million). The new service will expand the availability of deposits, withdrawals, loans, remittances, and cash transfers to rural locations. Commenting about the launch, CEO of XacBank Ganhuyag Ch. Hutagt said he hopes that XacBank will be able to make it affordable for some of the 40 percent of Mongolians who only use cash today to embrace mobile banking. CGAP is supporting XacBank with technical assistance and funding.

Type of service

Mobile remittance

Type of technology

SMS

Domain

M-Banking, M-Payment

Secured through

PIN

Cost for usage

not known yet

Partners

CGAP and XacBank

Additional information

The initiative was announced in July 2008, but has not been established yet.

Mobilink Genie www.mobilinkgsm.com/genie/index.php - Pakistan Short description

Mobilink Genie is Pakistanâ&#x20AC;&#x2122;s first service to offer the ability to pay bills, while on the move. Mobilink Genie ties the consumersâ&#x20AC;&#x2122; credit card and bank account to their Mobilink connection. In order to subscribe to the service, the consumer needs an


155 - Mobile payment services and pilots

internet/wWAP enabled mobile phone. Type of service

Mobile remittance

Type of technology

WAP/Internet

Domain

M-Payment

Secured through

Consumer number, Genie PIN and bank card PIN

Cost for usage

For downloading the application, standard GPRS rates apply, as well as standard SMS fees. Utility bill payments have a fee of PKR 20 (EUR 0.20)

Partners

Mobilink, Citibank Pakistan, KASB bank and Atlas Bank

Additional information

Users can subscribe through Mobilink or through one of the participating banks.

G-Cash www.g-cash.com.ph/main.aspx?rand=192 - Philippines Short description

Globe Telecom, its subsidiary G-Xchange and global moneytransfer services provider Western Union will join forces to introduce the GCash cross-border mobile money transfer service in the Philippines to support low-principal, high-frequency remittances. G-Cashâ&#x20AC;&#x2122;s main functions are cash deposit and withdrawal (accompanied by ID, at Globe offices and participating retailers), transfers of credit to the prepaid account (i.e. airtime top-up), transfers of airtime from one user to another, cash to and from other users, cashless purchasing, bill payments and inbound international remittances. Interestingly, registration for the GCash service can be activated over-the-air (OTA) i.e. without physical ID verification.

Type of service

Mobile remittance

Type of technology

SMS

Domain

M-Payment

Secured through

PIN

Cost for usage

Minimal charge of PHP 1.00 (EUR 0.02) per GCash transaction


Mobile payments 2010 - 156

Partners

None

Additional information

G-Cash was introduced by Globe Telecom in October 2004. Globe Telecom offers the G-Cash service with an electronic wallet feature that allows users to send and receive cash and make payments including bill payments, donations and online purchases via texting. Once connected to the Western Union service, operators will be able to use their own mobile wallet software to enable person-to-person mobile money transfers over Western Union's cross-border remittance network. The service enables consumers to transfer money to or from mobile wallets and will offer a global network of Western Union Agent locations for cash-to-mobile and mobile-to-cash transactions.

SMART Money Philippines Short description

It is a facility for linking the subscriber’s mobile phone with an emoney ‘cash’ account that is accessible from the mobile. The functionality allows a user to deposit cash, withdraw cash or top up the phone’s prepaid credit levels, from that ‘cash’ account or other bank accounts. Loading physical cash onto the SMART Money account can be done at SMART’s m-banking partner Banco de Oro branches, SMART Wireless Centres or SMART Padala outlets. The customer can also transfer prepaid credit or cash to another user. RheSmart money cars can used as a debit card to pay for goods and services at retials hsops and restaurants or to make withdrawals from ATM’s. The service allows users to transfer cash from one Smart Money card to another, also abroad.

Type of service

Mobile remittance

Type of technology

SMS

Domain

M-Payment

Secured through

PIN

Cost for usage

1% of transacted amount with a cap of PHP 50,000 (EUR 800)

Partners

Mobiel phone company Smart and MasterCard

Additional information


157 - Mobile payment services and pilots

Smart bank service Saudi Arabia Short description

The Quick Pay Remittance Service is NCB's remittance offering which will utilise Smart Money as the beneficiary account for funds sent to the Philippines. Saudi Arabia-based Filipinos are able to send funds directly to their beneficiary's Smart Money account through NCB's Quick Pay Remittance Service channels such as phone banking, internet banking, remittance centres, cash deposit machines, over-the-counter transactions at NCB branches and fund transfers via the bank's ATMs.

Type of service

Mobile remittance

Type of technology

SMS

Domain

M-banking

Secured through Cost for usage

Not disclosed

Partners

Philippine operator Smart Communications has partnered with Saudi Arabia's National Commercial Bank (NCB) to jointly launch an international remittance service utilising the Smart Money platform.

Additional information

EZ-link Singapore Short description

EZ-link card has been integrated into mobile phones in Singapore since September 2007, turning mobile phones into payment devices that are accepted at EZ-link terminals on buses and trains and at retail locations that accept EZ-link payments

Type of service

Mobile POS

Type of technology

NFC

Domain

M-Payment

Secured through Cost for usage

Free during trial


Mobile payments 2010 - 158

Partners

StarHub and EZ-link

Additional information

This launch of one of the largest public trials of such mobile payment technology, kicked off October 2007. It saw 1,000 participants use their phones like electronic wallets. They were able to tap their phones to pay for bus and train rides as well as items at McDonald's and 7-Eleven convenience stores. About 20,000 ez-link machines can read these special made-inSingapore phones, which are loaned to the trial users for six months.

SingTel www.singtel.com - Singapore Short description

Mobile operator Singapore Telecommunications (SingTel), Network for Electronic Transfers Singapore (NETS) and United Overseas Bank (UOB) have launched an NFC mobile phone payment trial in Singapore. The companies utilise technologies provided by US company ViVOtech, including NFC mobile payment wallet, Over-the-Air (OTA) payment, coupon delivery and redemption. The trial introduces a Stored Value Purse on NFC mobile phones and OTA servers to enable downloading and top-up of stored value accounts on the NFC phones. SingTel users can download a SingTel wallet application that will allow them to store and top up value on the mNETS payment application in their phones at any time. Users are able to make payments using NETS FlashPay by flashing their SingTel mobile phones at more than 500 participating merchants in Singapore, each one equipped with ViVOpay 5000 NETS FlashPay contactless terminals.

Type of service

Mobile POS

Type of technology

NFC

Domain

M-Payment

Secured through

PIN

Cost for usage

Not disclosed

Partners

SingTel, NETS, UOB, VivoTech

Additional

The service was launched in September 2008.


159 - Mobile payment services and pilots

information

Topping up of the mNETS card is performed over the air anytime and anywhere from the phone after registration of a SingTel-UOB credit card. The SingTel wall also comes equipped with an electronic coupon application that provides SingTel customers discounts and other incentives and freebies. The service allows users to open a coupon on their NFC-enabled phones and flash it to a NETS FlashPay reader for automatic redemption.

M1 Mobile Payments http://m1.com/sg/M1site/M1Corp - Singapore Short description

Citibank Singapore, Visa and Singaporean mobile operator MobileOne (M1) launched a three month NFC m-payments trial, which started 1 April. Three hundred Citibank Visa cardholders which are also M1's subscribers take part in the trial. Participants in the trial have been given NFC-based mobile phones, which are embedded with a computer chip that contains their credit card details. Trial participants can pay for purchases of up to SGD 100 (EUR 50) at over 400 merchants by tapping their phones against a wireless payment terminal.

Type of service

Mobile POS

Type of technology

NFC

Domain

M â&#x20AC;&#x201C; Payment

Secured through

PIN

Cost for usage

None during trial

Partners

MNO: M1; Financial: Citibank Singapore, Visa

Additional information

In February, Singaporeâ&#x20AC;&#x2122;s government announced plans to create an agency to regulate mobile payments services. The authority is due to ensure the security of all sensitive financial information being transmitted wirelessly. It will also make sure mobile payments systems are compatible with similar systems which will be rolled out in future.


Mobile payments 2010 - 160

BankOn www.keb.co.kr - South Korea Short description

In 2003. Kookmin Bank and LG Telecom began providing banking services via mobile phones, Called Bank On. The Bank On service enables Kookmin Bank customers to transfer and withdraw funds, view account balances, as well as pay transportation fares through their mobile phones.

Type of service

Mobile ticketing, mobile remittance

Type of technology

WAP/Internet

Domain

M-Payment

Secured through

Security card

Cost for usage

Fee: A/C transfer to other banks: 500 Won

Partners

South Korea Kookmin bank, LG Telecom

Additional information

In order to use BankOn mobile service, a financial chip should be installed in an exclusive mobile phone enabled to be installed with the chip.

K-merce http://english.ktf.com/eng/ - South Korea Short description

KT Freetel offers K-merce, which enables financial transactions from the mobile phone, including wireless credit card transactions, wireless Internet banking, shopping, and obtaining discount coupons and reservations

Type of service

Mobile Ticketing

Type of technology

NFC based: integrated circuit (IC) chip/ RFID

Domain

M-Banking M Payment

Secured through

None

Cost for usage

Free

Partners Additional information


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Moneta www.sktelecom.com - South Korea Short description

As a wired and wireless, integrated, total financial service that can be conveniently used via the web or mobile phone, Moneta provides a wide diversity of useful finance-related content and information on stock trading, financial investment and insurance. Moneta also offers users the individually-tailored services and advice of financial experts.

Type of service

Mobile POS, Mobile remittance

Type of technology

NFC

Domain

M-Payment

Secured through

For mobile banking: a 3-tier security system using PIN numbers, account numbers and security card information provides extra safety.

Cost for usage Partners

SK telekom: Moneta and M-bank services

Additional information

The Moneta card is a service that enables you to conveniently and safely pay for items and services by means of a chip attached to the cell phone that contains all the functions of credit, transportation, membership and cash cards. One single chip handles all the functions of a credit card, e-cash, transportation card and membership card. Moneta Bank is a mobile financial service that allows you to complete various financial or banking transactions as you would with a cash card, credit card or e-cash by means of a mobile phone equipped with an IC chip. The Moneta IC chip is attached to a mobile phone and has post payment transportation card functions for use with mass transit in Korea.

Tesco Visa Wave Trial South Korea Short description

In the pilot, participants will be issued with a Nokia 3220 phone pre-programmed with their regular Maybankard Visa Wave card information. It operates as a standard mobile phone connected to the Maxis network, but with the built-in Visa Wave function, it


Mobile payments 2010 - 162

can also be used to wave and pay at Visa Wave merchants. To address security concerns, transactions only work when the Mobile Visa Wave phone is in close contact with a terminal, ensuring that cardholder data cannot be intercepted between card and terminal. Additionally, Visa Wave is EMV-based and uses the strongest EMV authentication - dynamic data authentication (DDA) - for all transactions. Mobile Visa Wave payment in Malaysia combines NFC (near field communications) with Visa Wave contactless card technologies, building on the existing contactless platform, which amounts to 2,500 outlets and 160,000 cards, with five issuers and four acquirers of Visa Wave transactions Type of service

Mobile POS

Type of technology

NFC

Domain

M-Payment

Secured through

PIN (not always needed)

Cost for usage

User: none, merchant: credit card charge

Partners

Tesco, LG Card, Samsung, Motorola

Additional information

Banks have been issuing combined payment and contactless cards for several years, and one in four Visa cards In Korea has a transit application, Manners says. Among results to date are a 27% higher activation rate, 9% increase in POS spending and a reduction in dormant merchants. LG Card is South Korea’s biggest card issuer.

KTF Ubitouch Mobile Banking http://english.ktf.com/eng/ – South Korea Short description

Korean operator KTF will launch its UbiTouch mobile banking service. It is a one-chip solution enabling access to multiple banks. Ubitouch is connected to the user’s credit card. Initially, the service will be available for all seventeen domestic banks, except Shinhan Bank. UbiTouch users will be able to check account balances, make money transfers, and also make deposits and withdrawals. Subscribers can withdraw money by touching their mobile phone to one of the 39,000 ATMs on which the UbiTouch mark is shown.


163 - Mobile payment services and pilots

The system uses an ID-sensor. Registering account information is found into an USIM chip built into mobile phones and users secure money transfers and cash withdrawals using passwords. South Korean operators SK Telecom and LG Telecom also plan to adopt the same service soon. Ubitouch is the first one-chip multi-banking system. It requires an application download on the mobile phone. Type of service

Mobile Banking

Type of technology

Internet

Domain

M – Payment

Secured through

PIN

Cost for usage

None charged by MNOs. Use is subject to normal charges from financial institutions. Download of the application is free

Partners

MNOs: KTF, SK Telecom, LG Telecom. Banks: All South Korean domestic banks except Shinhan Bank

Additional

KTF has plans to further increase use to global markets in

information

accordance with the Bank of Korea’s regulatory-standards approval.

m-Ticketing Transportation Kaohsiung Taiwan Short description

The mobile ticketing TaiwainMoney Card is an e-ticketing card, which includes the world’s first MasterCard PayPass chip combicard (combination of a contactless card and normal card). Customers can check in and check out using NFC.

Type of service

Mobile ticketing

Type of technology

NFC

Domain

M-Order, M-Delivery

Secured through

PIN (not always needed)

Cost for usage

User: none, merchant: credit card charge

Partners

MasterCard, Taiwanese government, Kaohsiung Transport

Additional information

Launched in October 2005. The Taiwanese government commissioned the pilot.


Mobile payments 2010 - 164

Advanced MPay www.mpay.co.th/web/CT_what_general.html - Thailand Short description

Advanced mPay offers mPAY, a mobile payment system that enables the clients to pay bills, buy movie tickets, online music, and games. It allows its clients to pay for products and services using mobile wallet mCASH, as well as credit card or direct debit.

Type of service

Mobile remittance, Mobile POS

Type of technology

WAP/Internet and IVR

Domain

M-Payment

Secured through

PIN

Cost for usage

Free for consumers

Partners

MasterCard, Visa, Bangkok Bank, Kasikorn Bank, Bank of Asia

Additional information

Advanced MPay is a 70:30 joint venture firm between the Thai cellular market leader Advanced Info Service and Japan’s NTT DoCoMo.

TMB M-Banking www.tmbdirect.com - Thailand Short description

Through TMB M-Banking, clients can view account summary that dates back as long as nine months as well as monitor their accounts. Other features include cross-account and cross-bank money transfers. At the user’s request, SMS alerts can be sent to inform the client when a money transfer is completed. Moreover, TMB M-Banking clients can pay bills for various services and products such as credit card, electricity bills and mobile phone bills. TMB M-Banking users benefit from the bank's two-factor authentication systems, which require 128-bit SSL encryption and a special security system for mobile phones to ensure full encryption during usage. TMB’s savings and current account holders may apply for TMB M-Banking through tmbdirect.com, TMB Bank's ATMs or branches nationwide. The application is free.


165 - Mobile payment services and pilots

Type of service

Mobile remittance

Type of technology

WAP/Internet

Domain

M-Banking

Secured through

2 factor authentication

Cost for usage

No charge to the consumer, merchant pays an unknown fee

Partners

Uno Bank, Industrial Bank, Visanet

Additional information

The service was launched in October 2008

Kasikornbank Visa trial https://ebank.kasikornbank.com/kcyber/login.html - Thailand Short description

Visa and Thai Bank Kasikornbank participate in a mobile payments trial using Nokia's 6212 NFC-enabled handhelds in Thailand. The service enables bank users to upload their Visa accounts onto the Nokia 6212 handset which contains Visa’s payWave contactless application. This will allow Kasikornbank customers participating in the trial to make purchases at more than 1,000 payWave merchant locations in Thailand. Clients will be able to make mobile payments by waving their mobile phone over the Visa payWave contactless readers at the point-of-sale (POS). Purchases will be charged directly to the customer’s Kasikornbank Visa credit card account. The Visa payWave-enabled transactions are protected with the same security layers used for all Visa transactions. On top of contactless payments, the Visa payWave platform offers over-the-air personalisation, coupons and direct marketing.

Type of service

Mobile POS

Type of technology

NFC

Domain

M – Payment

Secured through

4 – digit PIN

Cost for usage

Free during trial period (until 30 June 2009)

Partners

Visa, Kasikornbank, Nokia

Additional


Mobile payments 2010 - 166

information

Bankararasi Kart Merkezi Turkey Short description

Turkey's national card switch and clearing centre BKM (Bankalararasi Kart Merkezi - Interbank Card Center) is planning a January launch for a year-long pilot of an independent near-field communication (NFC) infrastructure, with nine banks and two of the country's three mobile operators already on board. BKM will act as the Trusted Services Provider.

Type of service

Mobile POS

Type of technology

NFC

Domain

M-Payment

Secured through

SIM

Cost for usage

Unknown, pilot participants pay no fees

Partners

Bank: nine Turkish banks MNO: two of the three Turkish MNOs Trusted third party: BKM

Additional information

The trial is the second NFC trial in Turkey, but the first to aim at interoperability between different banks and different mobile network operators.

Turkcell Turkey Short description

Turkcell and Garanti Bank have launched on January 16, 2008 a Near Field Communication (NFC) trial for mobile payments. A contactless MasterCard PayPass credit card application is stored on the SIM card as a secure element. Venyon is responsible for loading and updating the application and user data on the SIM card via secure OTA services

Type of service

Mobile POS

Type of technology

NFC


167 - Mobile payment services and pilots

Domain

M-Payment

Secured through

SIM

Cost for usage

Unknown, pilot participants pay no fees

Partners

Bank: Garanti Bank MNO: Turkcell Card: MasterCard Technology: E-Kart, Venyon, Giesecke & Devrient

Additional information

In the trial, some 100 Turkcell and Garanti employees and customers will be provided with an NFC-enabled mobile phone. Some 3,000 merchants already have a contactless card terminal and are also able to accept mobile NFC payments.

Dubai Bank Mobile Banking www.ameinfo.com/173078.html - United Arab Emirates Short description

Dubai bank mobile banking allows Dubai Bank internet banking customers to do their online banking on their mobile telephones. The adjusted online banking website is now available via mobile internet. The service is a first in the UAE. The log-in procedure is similar to online banking, using username/password.

Type of service

Mobile remittance

Type of technology

WAP/Internet

Domain

M-Banking

Secured through

Username/password

Cost for usage

None

Partners

None

Additional information

The service was launched on October 27 2008

Du and Dubai First NFC trial United Arab Emirates Short description

In May 2009 the two parties started a six-month NFC trial in Dubai. Consumers link their credit card to their NFC enabled


Mobile payments 2010 - 168

phone and can make payments at 250 locations at The Walk shopping promenade. The parties expect to subsequently launch it commercially, incorporating additional partners. Type of service

Mobile payments

Type of technology

NFC

Domain

Mobile payments

Secured through Cost for usage Partners

MNO: Du. Bank: Dubai First

Additional information

Standard Chartered Mobile Banking www.standardchartered.ae/personal/home/en/index.html - United Arab Emirates Short description

The service works with all mobile phones and enables users to view bank account and credit card details, transfer funds and top-up mobile phone credit, among others. The service comes on the heels of an upgrade to its I-banking application. Also, the bank recently introduced and IVR self-service and automated bill payment system with telecommunications operator Etisalat. The bill payment system enables customers to pay their Etisalat bills directly from their debit or credit cards. Existing I-Banking customers can use their username and password to access the mobile banking service.

Type of service

Mobile banking

Type of technology

WAP/Internet and IVR

Domain

M â&#x20AC;&#x201C; Payment

Secured through

Username / Password

Cost for usage

None

Partners

MNO: Etisalat

Additional information

The service is only available for Internet-enabled mobile phones and can be seen as an add-on to the already existing internet banking services the bank offers.


169 - Mobile payment services and pilots

Mashreq Paymate Banking www.mashreqbank.com - United Arab Emirates Short description

UAE-based bank Mashreq has launched a mobile payments service in the UAE with Indian mobile commerce company PayMate. The service enables clients to use their mobiles to purchase products from retailers (POS or online) as well as pay their utility bills. Moreover, software widgets will allow users to purchase movie and flight tickets. With each payment, the amount will be charged directly to a customer's credit card or bank account (in the case of PayMate registered users). To use the service, Mashreq bank clients will need to make a onetime registration to link their existing bank accounts or credit card accounts to their mobile number. While making payments, Mashreq bank customers can either insert their card details on the mobile application or enter the PayMate PIN. With PayMate, payments are authorised using a 4digit PIN chosen by the user. The serviceâ&#x20AC;&#x2122;s security is ensured through a 2-factor PIN authentication over interactive voice response (IVR) and banking grade data security (PCI-DSS 1.2 certified).

Type of service

Mobile POS

Type of technology

WAP/Internet

Domain

M â&#x20AC;&#x201C; Payment

Secured through

4 digit PIN and IVR

Cost for usage

None during trial

Partners

Bank: Mashreq Bank; Platform: PayMate

Additional information


Mobile payments 2010 - 170

7.5 Australia Mobile Queensland www.boq.com.au - Australia Short description

Bank of Queensland (BOQ) has made their online banking portal available for mobile phone users, allowing them to use iPhone or any mobile device with an SSL-capable browser. No personal details are stored on the customer's mobile device. Mobile phone users surf to boq.mobi to access the online banking account on the mobile phone. Users can transfer money, pay bills, authorise payments, view transaction history. The use of a token is recommended, but not necessary.

Type of service

Mobile remittance

Type of technology

WAP/Internet

Domain

M-Banking, M-Payment

Secured through

Username/password

Cost for usage

None

Partners

Sandstone

Additional information

The service was introduced in September 2007. The mobile banking solution is from Sandstone Technology (North Sydney), vendor of Internet and mobile banking systems as well as loan origination processing systems. The solution features efficient coding and compressed file sizes for fast response time. Very little data is physically transmitted across the mobile network.

Telstra, NAB, Visa www.telstraenterprise.com â&#x20AC;&#x201C; Australia Short description

Contactless mobile payments is the first Australian mobile application of NFC, which will see Nab Visa credit card details securely loaded onto a Telstra SIM. For consumers, making a purchase will mean holding their mobile against a reader in a shop, then the payment is automatically loaded onto their Nab Visa credit card account. This technology can enable faster and


171 - Mobile payment services and pilots

easier payments which can mean less time at the checkout. Contactless Mobile Payments are already being used and trialed overseas as part of the GSM Association (GSMA) initiative and, as part of this, Telstra in partnership with NAB and VISA have launched this proof of concept trial in Melbourne. Type of service

Mobile POS

Type of technology

NFC

Domain

M-Payment

Secured through

SIM

Cost for usage

Free for pilot participants

Partners

MNO: Telstra Financial institutions: Visa, National Australian Bank

Additional information

The proof of concept trial which consists of approx 250 participants will encourage the use of Contactless Mobile Payments to make purchases under the value of AUD 35 around the Docklands area. The participant’s mobile phone will be fitted with Contactless Near Field Communications (NFC) technology and the SIM loaded with a NAB Visa card application. This Australia first trial encourages participants to explore the world without a wallet or purse – potentially, it could replace all plastic cards including loyalty, ticketing and credit cards.

7.6 Africa Mobile Money Cameroon Short description

Mobile Money has partnered with money transfer operator Express Union Cameroon to launch a mobile payment platform in Cameroon. The service allows mobile phone customers to transfer money and pay bills. The system was inaugurated in December in Yaoundé by Express Union. Mobile Money is available through a network of partners including micro-finance institutions, companies that provide cash for fund transfers and other physical outlets. The network is based on a central service which receives data from electronic payment terminals located in service partners’ outlets.


Mobile payments 2010 - 172

Type of service

Mobile remittance

Type of technology

SMS

Domain

M – Payment

Secured through

Identification at cashing point

Cost for usage

Not disclosed yet

Partners

Express Union Cameroon

Additional information

txtNpay www.textnpay.net – Ghana Short description Txtnpay is a mobile phone-based payment system that enables its users to send money to anyone with a mobile phone (in Ghana for the time being, but there are plans to expand abroad), pay bills, buy pre-paid airtime, check their bank balance, and purchase goods and services. The txtNpay wallet is an electronic stored value account. Customers fund the wallet by buying txtNpay electronic cash at a partner outlet or making a transfer from their bank account. txtNpay works with any mobile phone and mobile operator in Ghana. Every transaction is secured with a 5-digit PIN. Type of service

Mobile Remittance

Type of technology

SMS, WAP/Internet

Domain

M – Payment

Secured through

5 digit PIN

Cost for usage

Next to MNO-dependent SMS and data exchange charges, fees apply for opening an account as well as making a transaction. The exact fees are not disclosed, and only available upon opening an account in Ghana.

Partners

Brand owner: Africaxpress Financial; Zenith Bank, First Atlantic Merchant Bank, ADB Bank MNO; OneTouch, Kasapa, Tigo, MTN


173 - Mobile payment services and pilots

Additional information

TextNpay plans on making international P2P money transfers out of Ghana available to consumers in due time. P2P money transfers into Ghana are already available.

Orange Money www.orange.ci/omoney – Côte d’Ivoire Short description

Orange Money is a pre-paid wallet, managed on the mobile telephone. Orange Ivory Coast handles the services’ platform and marketing, while BNP Paribas’ Ivory Coast subsidiary BICICI is in charge of issuing and guaranteeing the electronic money. With Orange money, Orange customers can deposit and withdraw up to XOF 100,000 (EUR 152) from the Orange Money account, make person-to-person money transfers, top-up their airtime credit with up to XOF 10,000 (EUR 15.24) and pay bills. In order to use the service, customers have to open an Orange Money account at a accredited Orange agent.which is activated for free without requiring any minimum deposit. Users do not need bank accounts to subscribe to the service.

Type of service

Mobile banking, Mobile remittance

Type of technology

SMS

Domain

M – Banking & M – Payment

Secured through Cost for usage

The deposit of money has no fees attached to it. To withdraw money and transfer money, costs are 200 XOF for withdrawals/transfers up to XOF 2,000 to 3,000 XOF for withdrawals/transfers up to XOF 100,000. For a complete overview of fees: www.orange.ci/omoney/cashinout.php

Partners

MNO: Orange Telecom Financial Institution: BNP Paribas (BICICI branch)

Additional information

Orange plans to roll out this service to other African countries, Mali and Senegal are the first to follow.


Mobile payments 2010 - 174

Eazzy 24/7 www.equitybank.co.ke/ - Kenya Short description

Sms Banking allows customers to access limited services via the mobile phone. Customers can also top up their mobile phone with the new Equi-sms banking Top up Service. The target group is any of the clients with a phone who are looking for convenient banking - Small business owners, individuals, account holders, non-account holders looking for convenient access to their bank account. The infrastructure of this initiative is based upon the M-PESA infrastructure. Safaricom (owned by Vodafone) is partner in both the M-PESA initiative and in this Eazzy 24/7 initiative. Via Eazzy 24/7, the following services are available: account balance enquiries funds transfer order of statements stop cheque or payment instruction utility bill payments loan approval notification

Type of service

Mobile remittance

Type of technology

SMS

Domain

M-Payment

Secured through

PIN

Cost for usage

Transfer from EBK account to EBK account: KES 50 (EUR 0,50) Transfer from EBK account to other bankâ&#x20AC;&#x2122;s account: KES 150-200 (EUR 1,50 â&#x20AC;&#x201C; EUR 2,00)

Partners

Safaricom (Vodafone)

Additional information

Launched in September 2008. Equity Bank Kenya has 2.6 million customers who have 4.5 million accounts countrywide.


175 - Mobile payment services and pilots

Cooperative Bank of Kenya mobile banking www.co-opbank.co.ke/Main-Site/Home/Personal-Banking/Electronic-Banking/MobileBanking- â&#x20AC;&#x201C; Kenya Short description

M-Banking is an SMS-based telephone banking service developed to allow our customers enquire their bank account balances, purchase air time, request for mini statements, make utility payments and receive automatic salary alerts when cash enters their accounts. This product allows you greater accessibility and convenience in running your account by bringing all these services at your finger tips. Since its inception in 2004, M-Banking has become very popular with customers, and today counts in excess of 200,000 customers as subscribers.

Type of service

Mobile Banking

Type of

SMS

technology Domain

M â&#x20AC;&#x201C; Payment

Secured through

4 digit PIN

Cost for usage

Equal to normal banking fees

Partners Additional information

M-PESA www.safaricom.co.ke/m-pesa - Kenya Short description

Safricom offers an SMS-based payment and money transfer service based on SMS and pre-paid accounts. Through M-PESA a user can deposit or withdraw money, transfer money to another M-PESA customer or send money to a non M-PESA customer, buy Safaricom prepaid airtime and manage the M-PESA account. In December 2008, Safricom announced an extension of the service with UK-Kenya remittances in cooperation with Western Union.

Type of service

Mobile remittance


Mobile payments 2010 - 176

Type of technology

SMS

Domain

M-Payment

Secured through

PIN

Cost for usage

M-PESA contains the following charges: There are no charges for depositing cash into an M-PESA account, or for topping up airtime. Sending money to an M-PESA user costs KES 30 (EUR 0.30) for a transfer between KES 100 (EUR 1.01) and KES 35,000 (EUR 354). Sending money to a non-M-PESA person costs between KES 75 (EUR 0.76) and KES 400 (EUR 4.04) for a transfer between KES 100 and KES 35,000. Withdrawing cash costs between KES 25 (EUR 0.25) and KES 170 (EUR 1.72) with the size of the withdrawal varying between KES 100 and KES 35,000.

Partners

MNO: Safaricom, Bank: Citigroup, for international remittances: Western Union.

Additional

M-PESA was launched in February, 2007 in Kenya by Vodafone's

information

Kenyan subsidiary Safaricom. Once registered, a customer can send funds to any other phone number, on any network. The receiver gets a text message that can be taken to a re-seller agent and cashed in, enabling person-to-person money transfer instantly over large distances. Customers can also use their MPesa account balance to buy goods and services, download or withdraw cash at Safaricoms re-seller airtime distribution agents. It comes with a full transaction tracking and reporting service and anti money laundering measures and is being developed to allow international use for remittances, allowing Kenyans overseas to send money home quickly and much more cost effectively than most alternative means. It is aimed at mobile customers that do not have a bank account, and can only be used inside Kenya. Only Safaricom subscribers can send money by M-PESA, but the recipient need not be a subscriber or a bank account holder. A user can have up to KES 50,000 (EUR 504) in their M-PESA account, with no minimum balance, and charges are levied on a pay-as-you-go basis.


177 - Mobile payment services and pilots

Standard Chartered M-Banking www.standardchartered.com/ke/personal-banking/electronic-banking/m-banking/en/ Kenya, Tanzania Short description

The service allows bank customers to check their bank balance, view a mini bank statement for their last 3 transactions, change their PIN, request bank statements, transfer funds between personal accounts and nominated accounts, pay utility bills, enquire on FX rates, top-up their mobile phone balance and request a cheque book. In order to use the service, the bank’s customers have to physically register with the bank. Currently, the service is only available to the Safaricom and Zain subscribers. The service is also available to customers using international roaming and transactions will be limited to a single registered mobile number for security purposes. mBanking is based on the Unstructured Supplementary Service Data (USSD) standard for transmitting information over GSM signaling channels. The service was also lauched in Tanzania in February 2009.

Type of service

Mobile banking

Type of technology

USSD

Domain

M – Payment

Secured through

PIN

Cost for usage

Free of charge

Partners

MNO: Safaricom, Zain; Bank: Standard Chartered

Additional information

Zain M-Wallet www.zain.com/muse/obj/portal.splash – Kenya, Tanzania, Uganda Short description

Mobile operator Zain partners with international banks including Citigroup and Standard Chartered Bank to launch its Zap mbanking in Kenya, Tanzania and Uganda. The pilot project will replace Sokotele, Zain’s previous money transfer service which was in operation in several East African


Mobile payments 2010 - 178

countries. Zain enables customers to use their mobile phone to pay for goods and services, pay electricity bills (at present only in Kenya and Tanzania), send money to friends and family, transfer and receive money to and from their bank accounts, withdraw cash, top up airtime account or top up someone else's account as well as manage their bank accounts. Customers will be able to send credit to other Zain customers across Kenya, Uganda and Tanzania. With Zap, customers in Kenya are allowed to send and receive between KES 50 and KES 35,000 up to 25 times in a day, according to new regulations imposed by the Central Bank of Kenya. The same daily transaction limit applies to Safaricom’s MPesa money transfer service. Type of service

Mobile Remittance

Type of technology

SMS

Domain

M – Payment, M-Delivery

Secured through

Username – password

Cost for usage

Opening account is free of charge, other fees not disclosed

Partners

MNO: Zain; Banks: Citigroup, Standard Chartered; Technology: Oberthur Technologies,

Additional information

Mi-Pay Sierra Leone www.mipay.com - Sierra Leone Short description

Via Mi-Pay's online and mobile international remittance service, customers in the Sierra Leone corridor will be able to use their mobile phone or the web to send or receive money payments to or from friends and relatives abroad. The deals follows the launch of Mi-Pay’s mobile money transfer service in Sudan, which is being rolled out by agent-based Saraf Mobile across North Africa. The service precedes the anticipated announcement of an East African mobile banking deal.

Type of service

Mobile remittance


179 - Mobile payment services and pilots

Type of technology

SMS

Domain

M – Payment

Secured through

Identification upon receipt of money

Cost for usage

None during trial

Partners

Platform: Mi-Pay

Additional information

Cell Pay Point www.fnb.co.za - South Africa Short description

Customers registered for FNB's cellphone banking can use Cell Pay Point to purchase goods online directly from any of their transactional accounts. Users can use Cell Pay Point on any of the registered merchants' websites. Consumers will have to wait for broad access, as the Cell Pay Point solution requires vendors to sign up with the bank before the service is available on their website. When Cell Pay Point, FNB’s online payment solution, is chosen as the payment mechanism, the vendor displays a dial string which the customer dials. The customer is authenticated by their mobile PIN, and the purchase is confirmed by the handset without disclosing any banking or personal details.

Type of service

Mobile remittance

Type of technology

WAP/Internet

Domain

M-Payment

Secured through

User PIN

Cost for usage

Free for customer, merchant fee not disclosed by FNB

Partners

Internet Solutions, FNB

Additional information

The service started in July 2008. FNB has 700,000 account holders Customers who won’t be charged bank fees for goods purchased using Cell Pay Point.


Mobile payments 2010 - 180

MTN banking www.mtnbanking.co.za/site/MTNBanking/index2.html - South Africa Short description

MTN Banking is a division of Standard Bank, and is operated as a joint venture between Standard Bank and MTN. MTN Banking consists of two components, MTN MobileMoney and MTN Credit Card. The MTN MobileMoney account is a fully functional bank account integrated into Standard Bankâ&#x20AC;&#x2122;s systems and thus into the national payments system (NPS). MTN banking is codeveloped by mobile operator MTN and the Standard Bank. MobileMoney offers the following payment features: P2P money transfers, in-store payments, making and receiving payments to and from any bank account in South Africa, authorising debit orders, initiating stop orders, account payments to various bankdefined beneficiaries, certain municipalities and Telkom, buying prepaid airtime and electricity. Prepaid airtime can be purchased for other users and for users on other networks.

Type of service

Mobile remittance

Type of technology

WAP / Internet - Mobile Money is a full bank account. It can be managed remotely via Internet or Mobile.

Domain

M-Banking

Secured through

SIM

Cost for usage

Bill payment and money transfers to other banks accounts generate transaction fees of ZAR 3 (EUR 0.24). Airtime or electricity purchased is free of charge.

Partners

MTN banking is developed by MNO MTN and the Standard Bank.

Additional information

MobileMoney is a transactional account, and its functionality accessed through the use of an MTN SIM card. MTN is the primary service provider, responsible for account opening, marketing and distribution. A client is offered an option of two cards: a MobileMoney debit cash card or MTN MasterCard functioning as a credit card, which allows for internet operability, but with a zero credit limit.


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POC it www.pocit.co.za – South Africa Short description

POCit is a personal payments tool that allows consumers to make payments via their credit card using their mobile phone. POCit allows subscribers to receive, request, pay money, buy airtime and pay medical bills.

Type of service

Mobile remittance

Type of technology

WAP/Internet

Domain

M-Payment

Secured through

Login name and PIN

Cost for usage

Until December 31, 2008 – free From January 1, 2009: Receive payment ZAR 0.10 (EUR 0.01) Request payment: ZAR 0.30 (EUR 0.02) Make payment: Up to ZAR 2,000 (EUR 153) free, then 2%

Partners

Visa, Mastercard, Capitec Bank

Additional information

Only one account can be stored on one mobile phone. The use of multiple POCit accounts is not allowed. Recently (January 2009) POCit added POCit Elect to its service offering, enabling clients to make donations to selected charities without a fee.

SWAP Mobile www.swapmobile.co.za – South Africa Short description

SWAP uses the USSD phase 2 mobile network protocol as its preferred method of facilitating transactions and communicating with customers. USSD 2 is supported by all South African cellular operators and GSM cellphones, is faster than SMS and allows for real time interactive communications between customer cellphones and the SWAP system. SWAP Mobile is has wallet functionality. Users can add funds to their wallet with an electronic fund transfer, or link their bank account or credit card for full SWAP Wallet functionality.


Mobile payments 2010 - 182

Type of service

Mobile remittance

Type of technology

USSD

Domain

M-Payment

Secured through

PIN

Cost for usage

Free for consumer, merchant pays the following fees: Activation of account ZAR 20 (EUR 1.52) Batch transfer fee (every time the merchant wants his accumulated credit to be transferred to his bank account): ZAR 5 (EUR 0.38) Transaction fee: 3.5% There are some notification fees,(ZAR 0.05 per email or ZAR 0.20 per SMS) which can be avoided by choosing to receive the notifications in the online portal.

Partners Additional information

The companyâ&#x20AC;&#x2122;s target for next year is to secure 10 percent of the market by the end of the year, i.e., to be processing 10 percent of payments made to businesses in South Africa by end-2009.

Wizzit www.wizzit.co.za - South Africa Short description

Wizzit offers a low cost, transactional bank account that uses cell phones for making person-to-person payments, transfers and prepaid purchases. Wizzit also offers an internet banking facility and a credit card for purchases in the formal retail sector

Type of service

Mobile remittance

Type of technology

SMS

Domain

M-Payment

Secured through

PIN

Cost for usage

Wizzit does not charge a monthly administration fee as fees are charged per transaction, a so-called pay-as-you-go model, similar to the model employed elsewhere in the developing world.

Partners

South African Bank of Athens

Additional

Wizzit offers a low cost transactional bank account that uses cell


183 - Mobile payment services and pilots

information

phones for making person-to-person payments, transfers and prepaid purchases. It is accompanied by a Wizzit maestro debit card for making payments in the retail market. Wizzit defines its target market as the unbanked and under-banked population of South Africa. It operates without branches, and has positioned itself as a virtual bank. Clients open accounts through one of 1400 ‘Wizzkids’, who are members of the local community and can communicate with customers in their own language.

Cellphone Banking Absa www.absa.co.za – South Africa Short description

Absa was the first South African bank to introduce Cellphone Banking services in the year 2000.

Absa’s Cellphone Banking services are provided across three different technological platforms (secure SMS, mobile WAP internet and USSD), catering for different customer segment needs.

Cellphone Banking allows clients to load beneficiaries and make payments, purchase airtime, make inter-account transfers, view balances and statements, send notices of payments, and make cardless ATM payments using Absa’s CashSend facility.

The most popular type of Cellphone Banking transactions are balance enquiries, mini-statements and prepaid top-ups. Type of service

Mobile Banking

Type of technology

SMS, WAP/Internet, USSD

Domain

M – Payment

Secured through

4 digit PIN

Cost for usage

Transaction fees: ZAR 6.00 (EUR 0.55) for first ZAR 100 (EUR 8.61) ; ZAR 1.90 (EUR 0.16) for every next ZAR 100 or part thereof, with a maximum of ZAR 35.00 (EUR 3.00)

Partners Additional

Over the last few years there has been a surge in uptake, with up


Mobile payments 2010 - 184

information

to 5000 new clients registering for Cellphone Banking each day. Absa claims to have 4 million clients on its mobile banking service. There are 1.7 million logons to Absa’s Cellphone Banking services each month. 40,000 SMEs use Absa’s Cellphone Banking.

Saraf Mobile Sudan Short description

Saraf-Mobile offers people in Sudan the opportunity to transfer money immediately from one recipient to another irrespective of their location. People can send money to family and friends; businesses can receive payment direct from customers’ mobiles; and financial institutions can target and serve the huge mobile consumer base that exists within the region. All that’s required to make a transfer is the recipient’s mobile phone number. Saraf Mobile’ also creates a new authorised cash channel for both the ‘banked and unbanked’. Individuals can go to a ‘SarafMobile’ agent to transfer money easily, securely and quickly; the recipient is advised same-time via SMS to go to their local “SarafMobile” agent to collect the transferred cash.

Type of service

Mobile remittance

Type of technology

SMS

Domain

M – Payment

Secured through

PIN

Cost for usage

Not disclosed

Partners

MNO: Saraf Mobile, Platform: Mi-Pay, Financial service solutions: Isys

Additional information

The new pan-Arab service is the first phase in a planned roll-out which will cover 22 countries within the Middle East and North Africa.


185 - Mobile payment services and pilots

CelPay www.celpay.com – Zambia, Tanzania and D.R. Congo Short description

Celpay enables citizens of Zambia, Tanzania and Democratic Republic of Congo (former Zaire) to make person-to-person payments via SMS. Customers can load their wallet by paying a Celpay agent and can send it to benificiaries, who can retrieve the money in cash from Celpay agents.

In Zambia, Celpay has an independent distribution network which comprises of 100 agents, 6 major banks and recently launched a partnership with Zambia Postal Services Corporation which has over 200 post offices and postal agents. This makes Celpay the single biggest distribution network available in Zambia. Type of service

Mobile Remittance

Type of technology

SMS

Domain

M – Payment

Secured through

4 digit PIN

Cost for usage

Depends on

Partners Additional information

Celpay is currently handling and processing transactions worth K100 billion (or US$25,000,000) per month from payments made by individuals and corporates for goods and services. Celpay is tried and tested and US$500 million worth of transactions were processed in the last five years. Celpay Zambia expects to reach the US$1 billion mark by 2010. The future plans of Celpay include expansion into Zimbabwe and Kenya.

Mukuru.com www.mukuru.com - Zimbabwe, South Africa Short description

Mukuru is an online storefront that can be accessed by internet or phone. It is a quick, easy way to do money transfers, buy fuel, pay for subscriptions or top up a friend or relative’s mobile


Mobile payments 2010 - 186

phone. It’s a UK – Zimbabwe/South Africa remittance service. UK customers can sign up and transfer money to Mukuru’s bank account. Mukuru then will transfer the money to the intended recipient the next day via a voucher, delivered on the recipient’s mobile telephone. Type of service

Mobile remittance

Type of technology

SMS

Domain

M-Delivery

Secured through

Passport. If someone wants to redeem the SMS at the Point of Sale, he or she must be identified through a passport by the shop’s employee, before redeeming the voucher.

Cost for usage

None as such, but unfavourable exchange rates with 15% margin, about 10% higher than ‘normal’ exchange margins. So about 10% of the transferred sum can be regarded as remittance fee.

Partners

Mukuru.com

Additional

The participating petrol stations vary from month to month, but

information

there are always member stations within the Harare city limits. The system plans to launch similar services in Kenya, Malawi and Zambia.

E-Fulusi Uganda http://www.efulusi.co.tz - Uganda Short description

Monitise will integrate its mobile money manager with E-Fulusi services to offer users in East Africa a service which allows them to save money, deposit and withdraw cash, manage a bank account, transfer funds and also to make payments through mobile networks, banks and mobile handsets.

Type of service

Mobile Banking, Mobile Remittance

Type of technology

SMS

Domain

M – Payment

Secured through

PIN

Cost for usage

Not disclosed

Partners

Technology: E-Fulusi, Monitise


187 - Mobile payment services and pilots

Additional information

Monitise has recently been awarded USD 1.5 million representing funding by the Africa Enterprise Challenge Fund (AECF) to deliver its service in East Africa. Monitise East Africa will initially offer services in Uganda with headquarters in Kampala. In due course the service will expand into neighbouring countries, including Burundi, Democratic Republic of Congo, Ethiopia, Kenya, Rwanda, Tanzania and Zambia

MTN MobileMoney www.mtn.com - Uganda, Benin, Congo Brazzaville, Guinea Bissau, Guinea, Liberia Short description

Telecommunication services provider MTN Group offers mbanking trials in Benin, Congo Brazzaville, Guinea Bissau, Guinea, Liberia and Uganda. The move comes after the company launched its Mobile Money Transfer in Uganda following the completion of a 5-month trial. MTN has partnered with local banks from each of the 5 markets in order to ensure that its MMT services are fully compliant with financial services regulations. MTN’s service MTN Mobile Money allows MTN subscribers to send money, buy airtime and pay bills using their mobile phones. MTN Mobile Money is available to all MTN banked or unbanked subscribers. Besides enabling money transfers between MTN subscribers, it allows users to send money to people which do not have MTN SIM cards or mobile phones via a network of agents in their country. MTN Mobile Money is a SIM-based version of Fundamo’s Mobile Wallet Solution version 3.1.

Type of service

Mobile Banking, Mobile Remittance

Type of technology

SMS

Domain

M – Payment

Secured through

PIN

Cost for usage

Free during the pilot, commercial fees not yet disclosed

Partners

MNO:MTN; Bank: Standard Bank Uganda, Technology: Fundamo

Additional information

MTN Uganda Mobile Money users are allowed to transfer amounts between UGX 5,000 (EUR 1.98) and UGX 1 million (EUR 398) to another person. MTN claims to have 600 agents where users can transfer and withdraw money.


Mobile payments 2010 - 188

Bank a billion www. bankabillion.org - World Short description

Bank a billion is an initiative by Grameen and Obopay to serve a billion unbanked people by 2018. By 2018 the worldâ&#x20AC;&#x2122;s poor will benefit fully from mobile banking services because everyone with a mobile phone will have access to affordable financial services that empower their life and work. This includes access to savings, money transfer, payments and micro-credit.

Type of service

Mobile remittance

Type of technology

SMS

Domain

M-Banking

Secured through

Not decided yet

Cost for usage

Not disclosed yet

Partners

Grameen Bank, Obopay

Additional information

At the confluence of the un-banked and mobile phone lies an unprecedented opportunity to overcome one of the most crucial issues we face today. Using mobile technology to deliver mobile microcredit services overcomes previously limiting restrictions of space and time by using existing infrastructure to give even the most impoverished to access financial services. The potential for immediate and broad global impact on the problem of financial exclusion is vast.


Annexes


Annex I: Glossary 3GPP The third generation partnership project (3GPP) is a collaboration of groups of telecommunications associations, to make a globally applicable third generation mobile phone system specification within the scope of the International Telecommunication Union. AMPS Advanced Mobile Phone System (AMPS) is the analogue mobile phone system standard developed by Bell Labs, and officially introduced in the Americas in 1983 and Australia in 1987. It was the primary analogue mobile phone system in North America (and other locales) through the 1980s and into the 2000s. As of February 18, 2008, Carriers in the United States were no longer required to support AMPS and companies such as AT&T and Verizon have discontinued this service permanently. ANSI The American National Standards Institute is a private non-profit organisation that oversees the development of voluntary consensus standards for products, services, processes, systems, and personnel in the United States. The organisation also coordinates U.S. standards with international standards so that American products can be used worldwide. ATM An Automated Teller Machine (ATM) is a computerized telecommunications device that provides the customers of a financial institution with access to financial transactions in a public space without the need for a human clerk or bank teller. CDMA Code division multiple access (CDMA) is a channel access method utilized by various radio communication technologies. It should not be confused with the mobile phone standards called cdmaOne and CDMA2000 (which are often referred to as simply â&#x20AC;&#x2DC;CDMAâ&#x20AC;&#x2122;), that use CDMA as their underlying channel access methods. CDMA 2000 CDMA2000 is a hybrid 2.5G / 3G technology of mobile telecommunications standards that use CDMA, a multiple access scheme for digital radio, to send voice, data, and signalling data (such as a dialled telephone number) between mobile phones and cell sites. Consumer A consumer is an individual or household that use goods and services generated within the economy. The consumer is the end-user of a product or service, and constitutes the last element in the production-consumption chain of goods and services.


191 - Annex I: Glossary

Context or Transaction Context The context or transaction context is the total of situational circumstances in which each of the three processes of the transaction – agreement, payment and delivery - take place. Easy Sell An easy sell is an innovation that only differs slightly from its precursor. Also the method of using the innovation is similar or almost similar to using the product or service it is supposed to replace. Ecosystem Term derived from biology; a natural unit consisting of different elements in an area functioning together with other factors of the environment. EMV EMV is a standard for interoperation of IC (or Chip) cards and IC capable point of sale terminals and ATM’s, for authenticating credit and debit card payments. The name EMV comes from the initial letters of Europay, MasterCard and Visa, the three companies which originally cooperated to develop the standard. Europay International SA was absorbed into MasterCard in 2002. JCB joined the organisation in December 2004. IC Card systems based on EMV are being phased in across the world, under names as IC Credit and Chip and PIN. ETSI ETSI is short for European Telecommunications Standards Institute. ETSI is an independent non-for-profit standardisation organisation of the telecommunications industry – equipment makers and network operators – in Europe, with worldwide projection. ETSI has produced standardizing the GSM cell phone system and the Tetra professional mobile radio system. European Central Bank The European Central Bank (ECB) is the Central Bank of the Euro currency area. The central bank is the entity responsible for the monetary policy of a country or a group of member states. Its primary responsibility is to maintain the stability of the national currency and money supply; sometimes controlling subsidized loan interest rates and acting as a lender of last resort to the banking sector during times of financial crisis are added to this. The ECB was established by the EU in 1998 with its headquarters in Frankfurt, Germany. European Commission The European Commission – formally the Commission of the European Communities – is the executive branch of the European Union. The body is responsible for proposing legislation, implementing decisions, upholding Union’s treaties and the general day-to-day running of the Union.


Mobile payments 2010 - 192

European Payments Council The European Payments Council (EPC) is the decision-making and coordination body of the European banking industry in relation to payments. Its primary responsibility in recent years has been the implementation of SEPA, the Single European Payments Area. FI or Financial Institution A financial institution acts as an agent that provides financial services for its clients or members. Financial institutions generally fall under financial regulation from a government authority. Common types of financial institutions include banks, building societies, credit unions, stock brokerages, asset management firms, and similar businesses. Financial institutions provide a service as intermediaries of the capital and debt markets. They are responsible for transferring funds from investors to companies, in need of those funds. The presence of financial institutions facilitates the flow of monies through the economy. To do so, savings accounts are pooled to mitigate the risk brought by individual account holders (see adverse selection) in order to provide funds for loans. Such is the primary means for depository institutions to develop revenue. Should the yield curve become inverse, firms in this arena will offer additional fee-generating services including securities underwriting, and prime brokerage. FX rate FX rate stands for foreign exchange rate â&#x20AC;&#x201C; also known as forex rate or exchange rate. It specifies how much one currency is worth in terms of another. Global Platform A global platform describes some sort of hardware architecture or software framework that allows software to run on a global scale. Typical platforms include a computerâ&#x20AC;&#x2122;s architecture, operating system, programming languages and related runtime libraries or graphical user interface. GSMA The GSM association (GSMA) is the global trade association representing 700 GSM mobile phone operators. In addition, 180 manufactures and suppliers support the associationâ&#x20AC;&#x2122;s initiatives as key partners. The primary goals of the GSMA are to ensure mobile phones and wireless services work globally and are easily accessible, enhancing their value to individual customers while creating new business opportunities for operators as their suppliers. Innovation An innovation is a good, service or idea that is perceived to be new by its adopters Long Hauls A long haul is an innovation which differs significantly from its precursor. Also the way consumers should use the innovation is different from the way consumers had to use its precursor.


193 - Annex I: Glossary

Merchant Merchants function as professionals who deal with trade, dealing in commodities that they do not produce themselves, in order to produce profit. MNO Mobile Network Operator is a company that provides mobile phone service and has its own frequency allocation of the radio spectrum, and it has the entire infrastructure required to provide mobile telephone service. Mobile originated SMS billing Payment method via SMS where the intended payee originates the payment by sending an SMS Mobile payment A payment where the mobile phone is involved in the initiation and/or confirmation of the payment. The payer may or may not be ‘mobile’ or ‘on the move’. Mobile terminated SMS billing Payment method via SMS where the intended payee closes the payment by receiving one or more SMS messages. Modular architecture Refers to a design of any system composed of separate components than can be connected together. MoSign MoSign is a project (short for Mobile Signature) initiated by Deutsche Bank, Ericsson, Materna, Microsoft, Sema Group, Siemens and TC TrustCenter in order to demonstrate the deployment of electronic signatures using a mobile signing device. This device was developed by Siemens. MVNO A Mobile Virtual Network Operator is a company that provides mobile phone service but does not have its own frequency allocation of the radio spectrum, nor does it have all of the infrastructure required to provide mobile telephone service. NFC Near Field Communication (NFC) is a short-range high frequency wireless communication technology which enables the exchange of data between devices over about a ten centimetre (or four inches) distance. The technology is a simple extension of the ISO 14443 proximity-card standard that combines the interface of a smartcard and a reader into a single device.


Mobile payments 2010 - 194

OTA OTA stand for Over The Air. It refers to the transportation of messages wirelessly and without landline. Payment A payment is a transfer of wealth from one party to another. A payment is usually made in exchange for the provision of goods, services or both, or to fulfil a legal obligation. Payment Institution A legal person that has been granted authorisation in accordance with the Payment Services Directive (PSD) to provide and execute payment services throughout the European Community. It is envisaged, but not a requirement, that a payments institution would be an entity providing as its core business payment services, as distinct from other banking services. However, the PSD does allow for hybrid institutions, such as telecoms providers, who in the course of their business may also provide some forms of payment service (and in turn are to be regarded as payment institutions). Perceived Risk Perceived risk is the subjective judgment that people make about the characteristics and severity of a risk. POS POS is short for Point Of Sale. It refers to a location where a transaction occurs, which is oftentimes a retail shop or the checkout counter in that shop. Premium SMS An SMS message for which the sender pays a higher fee than normal to cover the expenses for a good or service delivered. PSD PSD is short for Payments Service Directive. It is a law imposed by the European Union which intends to create equal legal conditions for payments in the EU. The consequence is that every cross-border payment in the EU can be treated as a domestic payment. Risk Risk is a concept that denotes a potential negative impact to some characteristic of value that may arise from a future event. Exposure to the consequences of uncertainty constitutes a risk. Secure Element Also Security Element. Physical place used for user authentication, authorisation and stored credentials; it houses confidential information.


195 - Annex I: Glossary

SEPA SEPA is short for Single Euro Payments Area. This is the vision, directive and goal of the European Commission to let consumers and businesses within the EU pay with one set of payments instruments. This set includes bank transfers, direct debits and cards. SEPA marks the end of international payments within the EU. Smart Card A smart card is defined as any pocket sized card with embedded integrated circuits which can process information. This implies that it can receive input which is processed and delivered as an output. There are two categories of smart cards: memory cards contain only non-volatile memory storage components and perhaps some specific security logic. Microprocessor cards contain volatile memory and microprocessor components. Smash hits A smash hit is an innovation which has a high degree of dissimilarity to the product or service it is supposed to replace. But the behaviour changes using the innovation require are limited. SMS Short Message Service is a communications protocol allowing the interchange of short text messages between mobile phone devices. Standardisation Standardisation is the process of developing and agreeing upon technical standards. A standard is a document that establishes uniform engineering or technical specifications, criteria, methods, processes or practices. StoLPaN Short for â&#x20AC;&#x2DC;Store Logistics and Payment with NFC. StoLPaN is a pan-European consortium supported by the ECâ&#x20AC;&#x2122;s IST program. StoLPaN examines the potential for bringing together the new kind of local wireless interface, NFC and mobile communication. Sure Failures A sure failure is an innovation which is differs only slightly from its precursor, but using the innovation requires a high degree of behavioural change. Transaction Context See context Trusted Services Manager Trusted third party who securely distributes and manages the service providers services to the mobile network operator customer base


Mobile payments 2010 - 196

UICC The Universal Integrated Circuit Card (UICC) is the chip card used in mobile terminals in GSM and UMTS networks. The UICC ensures the integrity and security of all kinds of personal data and it typically holds a few hundred kilobytes. UMTS Universal Mobile Telecommunications System (UMTS) is one of the third generation (3G) cell phone technologies, which is also being developed into a 4G technology. Currently, the most common form of UMTS uses CDMA as the underlying air interface. It is standardized by the 3GPP, and is the European answer to the requirements for 3G cellular radio systems. USSD Unstructured Supplementary Service Data (USSD) is a capability of all GSM phones. It is generally associated with real-time or instant messaging type phone services. There is no store-and-forward capability that is typical of â&#x20AC;&#x2DC;normalâ&#x20AC;&#x2122; short messages. Response times for interactive USSD based services are generally quicker than those used for SMS.


Annex II: References References BBC (2008) http://news.bbc.co.uk/2/hi/uk_news/1966247.stm Betty Collis (1993) Betty Collis (1993), University of Twente, the Netherlands. Computer Fraud & Security (2007) analysis of mobile payment security measures and different standards, Computer Fraud & Security, Saleem Kadhiwal & Muhammad Anwar Usman Shaheed Zulfiquar, Ali Bhutto Insitute of Science and Technology, Karachi, Pakistan â&#x20AC;&#x201C; June 2007 Contactlessnews.com (2008) http://www.contactlessnews.com/news/2008/01/11/contactless-market-continues-togrow-while-nfc-forecasts-revised-downward/ Eprint.iacr.org (2005) Picking Virtual Pockets using Relay Attacks on Contactless Smartcard Systems; Ziv Kfir and Avishai Wool, Tel Aviv University, Israel - 2005 http://eprint.iacr.org/2005/052.pdf Europa.eu (2007) http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/08/52&format=HTML&ag ed=0& language=EN&guiLanguage=en Gerhard Hancke (2007) A practical relay attack on ISO 14443 proximity cards, Gerhard Hancke, University of Cambridge, UK - 2007 http://www.cl.cam.ac.uk/~gh275/relay.pdf Harvard Business Review (2006) Eager Sellers and Stony Buyers, Understanding the Psychology of New Product Adoption, J. T. Gourville. Harvard Business Review - June 2006 Journal of Payment Strategy & Systems (2007) Understanding buyer and seller behaviour for improved payment product development, C. Liezenberg, D. Lycklama, H. Smorenberg, Journal of Payment Strategy & Systems - April 2007


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Juniper Research (2008) Juniper research: Mobile Payments: Strategies & Markets 2007-2011 Heiko Knospe (2006) Secure M-commerce Scarlet Schwiderski â&#x20AC;&#x201C; Grosche, Heiko Knospe, Information Security Group, University of London, UK - 2006 Mobey Forum www.mobeyforum.org Mobile Payments Update (The Paypers) http://www.thepaypers.com/newsletters/MobilePaymentsUpdate.aspx Mobilegazette.com (2008) http://www.mobilegazette.com/nokia-6212-classic-08x04x15.htm Mobilementalism (2006) http://mobilementalism.com/2006/02/11/samsung-and-philips-to-show-off-protoype-nfcphone-at-3gsm/ Mobile Monday (2002) http://www.mobilemonday.net/news/mobile-payment-market-to-reach-eur-55-billion-in2006 NFC-research (2007) http://www.nfc-research.at/index.php?id=45 Payments News (2007) http://www.paymentsnews.com/2007/04/abi_research_sc.html Technology Review (2008) http://www.technologyreview.com/Infotech/17355/page2/ ZDnetasia.com (2007) http://www.zdnetasia.com/news/communications/0,39044192,62031790,00.htm

General Internet resources For news on the mobile payments industry we can recommend the following websites: For news, feeds and research on the telecom industry: www.telecompaper.com For news and research on the payments industry:


199 - Annex II: References

www.thepaypers.com www.finextra.com www.paymentsnews.com

For more information on NFC: www.contactlessnews.com www.nfc-forum.org www.nfc-research.at


Annex III: About the editors and publishers Chiel Liezenberg Chiel Liezenberg is a founding partner of Innopay, an independent full service consulting firm specialised in payments and transactional services. Chiel is one of the thought leaders in online and mobile payments, e-invoicing and e-identity, shaping breakthrough business and market innovations, schemes and standards. Chiel holds an MA in Mechanical Engineering and Industrial Organisation from Delft University of Technology.

Ed Achterberg Ed Achterberg founded Telecompaper in 2000. As senior research analyst he has detailed knowledge about the Benelux telecommunications industry. He focuses on delivering in-depth analysis on trends across the Benelux and the Western European industry, for both the mobile and fixed/broadband market. Prior to Telecompaper, starting from 1995, Ed Achterberg worked as telecom consultant and focused on telecom regulation and legislation, numbering, interconnection, and number portability for several telecom operators, including BEN, Dutchtone, Enertel, Callmax, BT/Telfort and others. He has a Master of Science degree from the Delft University of Technology.

About Innopay Innopay is an independent full service consultancy firm specialised in payments and related transaction services. Our key practices include online payment, e-invoicing, e-identity, mobile payment, cards and related regulation. Given our independent position, we work for all players in the industry. We devote research time and investments to help peer professionals ‘structure & understand’ these topics and actively facilitate industry knowledge transfer, which we consider crucial for the further development of global e-business. Our leading industry reports can be downloaded for free. With our in-depth knowledge and experience gained on both the demand side and the supply side, we are ideally positioned to help our clients determine the direction of their growth. This often results in new products and/or markets that we successively help to ‘develop & manage’ and bring to market in a controlled and effective way. We do this for single clients but also for groups of clients. Consequently, we have extensive experience in developing multi-party transaction schemes and accompanying messaging standards in diverse industries such as financial services, insurance and document exchange. On the other side, we help corporate users to ‘choose & use’ the transaction services that fit their


201 - Annex III: About the editors and publishers

specific business needs from the wide array of often industry tailored transaction services on offer. We use a multi-disciplinary approach covering commercial, operational and technical aspects. Innopay is a member of the European Payments Consulting Association (EPCA) and the Payment Systems Market Expert Group (PSMEG) of the European Commission and an associate member of the Euro Banking Association (EBA). For more information visit www.innopay.com or contact Chiel Liezenberg at chiel@innopay.com or +31 20 6580651.

About Telecompaper Telecompaper has kept telecommunications professionals up-to-date since 2000. The company employs fifteen editors and analysts at its headquarters in The Netherlands, and also employs correspondents in various countries who track their local telecom markets. Telecompaper provides international customers with research, company updates, support and advisory services. Research: Our expert researchers are continuously monitoring the telecom industry. They offer answers to ad-hoc questions and compile reports such as research briefs, quarterly reports on the Dutch mobile and broadband industry, competitive updates, promotions updates and regularly updated company profiles. Our researchers have a deep understanding of the telecommunications markets and can help you make informed decisions. News feeds: Telecompaper actively tracks the global telecommunications industry. Although we have a global focus, we also have local presence as our correspondents provide us with news from their local market. We can develop a bespoke news feed or corporate intranet solution, but also offer several pre-defined feeds such as Asia Telecom Daily, Western European Telecoms, and country-specific Feeds. News access: Our News Access subscriptions allow you to log in and search our site for news items. Using our news database can make your life easier as the news is timely, focussed, to-the-point and objective. The news items are written in English and are specifically targeted at telecoms professionals. In addition to website access, we also provide weekly Digests on various topics and regions. For more information visit www.telecompaper.com or contact Ed Achterberg at ed@telecompaper.com or +31 30 6349600.


Innopay Mobile Payments