Mobile Payment Magazine

Google to Integrate NFC in “Gingerbread” Android OS

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Google CEO Eric Schmidt has indicated that the coming “Gingerbread” Android release will have integrated Near Field Communication (NFC), which will allow for interaction with hardware devices, and may well lead to a revolution in proximity payment processing via mobile phones, and a new boom of mobile payment startup companies. Schmidt made his comments during the Web 2.0 conference in San Francisco earlier today.

Using “tap and pay,” says Schmidt, the theory is that you will be able to walk into stores and do commerce, and eventually replace credit cards.

“Ultimately the technology is personal, secure, and an aggregating technology,” according to Schmidt. Google would expect to partner with payment processors, and the credit card industry believes the losses will be a lot less than with standard credit cards, he added.

View the full interview here:

Mobile Banking in Africa

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Mobile operators and industry experts see the mobile payment, also called Mobile Banking, MBanking, M-payment or SMS

Banking, as the future of a cashless society.

The mobile payment works by storing a consumer’s credit or debit card within the SIM card and employing the near-field communication (NFC) technology1 or sending money by text message. Clients can convert cash into electronic money (and vice

versa) through any retail outlets and then use their mobile phone to instantaneously send and receive money wherever they have cell coverage.

via Financial Technology Africa | Will You Pay By Credit Card? No, I Have My Mobile Thanks.

ClairMail

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ClairMailClairMail provides mobile banking and payments solution for banks, credit unions, card services and payments. More than just a veneer for traditional online banking, ClairMail allows financial institutions to tap into the ubiquitous, real-time and actionable nature of the mobile phone to take have a more direct participation in customer interactions.

ClairMail has a comprehensive suite of mobile banking and payments applications built on a flexible, enterprise-ready mobile platform. Eight of the top twelve banks in North America use ClairMail to power their mobile banking offerings. Benefits to the financial institutions include lower costs, enhanced acquisition, improved retention, fraud reduction and generation of revenue.

ClairMail’s mobile banking and payments solution provide:

  • 100 Percent Coverage: Reach all customers, not just online banking customers.
  • Proactive 1:1 Conversations: Deliver personalized, high-value content that customers want.
  • Triple Play Convergence: Optimize the customer’s mobile experience and reduce TCO.
  • Cross-Product, Cross-Channel Orchestration: Extend mobile across the entire organization.

ClairMail is located in San Rafael, California. Investors include Norwest Venture Partners, Outlook Ventures, JAFCO Ventures, and Investor Growth Capital.

More information: ClairMail

PayNearMe

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PayNearMe enables consumers to pay for a wide variety of goods and services from leading companies in e-commerce, direct response and catalog marketing, consumer finance, money transfer, and beyond at a local store, starting with 6,000 7-Eleven stores across the United States.

PayNearMe was awarded Best of Show at FinovateFall 2010.

More information: PayNearMe

Mobile Payments: Introduction

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Mobile payment, also referred to as mobile money, mobile money transfer, and mobile wallet generally refer to payment services operated under financial regulation and performed from or via a mobile device. Instead of paying with cash, cheque, or credit cards, a consumer can use a mobile phone to pay for a wide range of services and digital or hard goods.

Although the concept of using non-coin-based currency systems has a long history, it is only recently that the technology to support such systems has become widely available.

In developing countries mobile payment solutions have been deployed as a means of extending financial services to the community known as the “unbanked” or “underbanked,” which is estimated to be as much as 50% of the world’s adult population, according to Financial Access’ 2009 Report “Half the World is Unbanked”. These payment networks are often used for micropayments.

There are four primary models for mobile payments:

Some mobile payment solutions are also used in developing countries for micropayments.

Source: Wikipedia

Zong

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Zong allows quick payments for online good via mobile phone.

From the customer side, when it’s time to pay for something online, the customer just clicks the  Zong button. A payment screen will pop up, where the customer enters a mobile number. Zong sends a secure PIN code, which the customer enters online, and the transaction is complete.

Merchants
Best for purveyor of virtual currency, sellers of virtual goods, or digital content publishers, Zong features direct connections with carriers around the world. With no middlemen, Zong provides high-availability payment services and competitive pricing.

More information: Zong

SMS, USSD Based Mobile Payments

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The consumer sends a payment request via an SMS text message or an USSD to a short code and a premium charge is applied to their phone bill or their mobile wallet. The merchant involved is informed of the payment success and can then release the paid for goods.

Since a trusted delivery address has typically not been given these goods are most frequently digital with the merchant replying using a Multimedia Messaging Service to deliver the purchased music, ringtones, wallpapers etc.

A Multimedia Messaging Service can also deliver barcodes which can then be scanned for confirmation of payment by a merchant. This is used as an electronic ticket for access to cinemas and events or to collect hard goods.

Transactional payments have been popular in Asia and Europe but are now being overtaken by other mobile payment methods such as mobile web payments (WAP), mobile payment client (Java ME, Android…) and Direct Mobile Billing for a number of reasons:

  1. Poor reliability – transactional payments can easily fail as messages get lost.
  2. Slow speed – sending messages can be slow and it can take hours for a merchant to get receipt of payment. Consumers do not want to be kept waiting more than a few seconds.
  3. Security – The SMS/USSD encryption ends in the radio interface, then the message is a plaintext.
  4. High cost – There are many high costs associated with this method of payment. The cost of setting up short codes and paying for the delivery of media via a Multimedia Messaging Service and the resulting customer support costs to account for the number of messages that get lost or are delayed.
  5. Low payout rates – operators also see high costs in running and supporting transactional payments which results in payout rates to the merchant being as low as 30%. Usually around 50%
  6. Low follow-on sales – once the payment message has been sent and the goods received there is little else the consumer can do. It is difficult for them to remember where something was purchased or how to buy it again. This also makes it difficult to tell a friend and friend.

Source: Wikipedia

Many Mobile Banking App’s Not Secure, Says viaForensics

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On the heels of the news of PayPal’s vulnerable iPhone application, The Wall Street Journal broke news of additional vulnerabilities in other major financial institutions’ smart phone applications. These security flaws were uncovered by computer and mobile forensics firm, viaForensics, who tested smart phone applications from Bank Of America, Chase, TD Ameritrade, USAA, Wells Fargo and Vanguard, in addition to PayPal.

viaForensics has been communicating and coordinating with the financial institutions to address the flaws. Most of the institutions were able to quickly resolve the issues and release new versions of their applications.

According to American Banker 25% of the mobile banking programs analyzed received a poor rating: ” In most cases, these failures occurred because testers were able to recover a user password or other sensitive user data from a user’s mobile device. In some cases, the apps cached a security PIN or a user name and password. In other instances testers were able to recover payment history, partial credit card numbers and other transaction-related data. About a third (31%) of mobile banking apps received a “Warn” grade because a user name or app data was present, but not considered a significant risk to the user. The remaining 44% of mobile banking apps passed the test.”

viaForensics has retested the applications and released the results through appWatchdog, a free service which tests publicly available mobile applications for insecure transmissions or storage of sensitive user data. The service measures such factors as how securely the app handles user names and passwords. If not handled properly, security lapses can place the user at risk for data and financial theft. A deeper audit is offered through appSecure, which provides sophisticated security testing and recommendations for securing the app.

Sources: viaForensics, American Banker

ViVOtech

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ViVOtech is a leading end-to-end enabler of next-generation NFC mobile payments, loyalty and marketing solutions—including mobile wallet, patented Over-The-Air (OTA) provisioning, Trusted Service Manager infrastructure, NFC touch point (smart poster) management, and loyalty/coupon management software; and contactless NFC payment acceptance terminals.

ViVOtech’s software solution not only works with emerging NFC-enabled smartphones, but also with multiple existing mobile handset models including BlackBerry, iPhone, Android, and Nokia with add-on NFC accessories.

ViVOtech products are used by retailers, banks, processors, and mobile network operators all over the globe; the company has shipped more than 780,000 contactless NFC terminals to more than 35 countries.

In 2009, ViVOtech received the Frost and Sullivan North American Smart Cards Product Line Strategy of the Year Award. In 2010, ViVOtech received the 2010 Mobility Award for its NFC mobile ViVOwallet software, Smart Card Alliance Award “Outstanding Smart Card Achievement” (OSCA) Award for Innovation in Payments Technology and the Contactless Intelligence “Monkey” Awards for Competitive Advantage through Technology used by Citi Tap and Pay NFC Pilot.

ViVOtech’s investors include Citi, First Data Corporation, Motorola Ventures, NCR and Nokia Growth Partners.

More information: ViVOtech.

Direct Mobile Billing

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The consumer uses the mobile billing option during checkout at an e-commerce site—such as an online gaming site—to make a payment. After two-factor authentication involving a PIN and One-Time-Password, the consumer’s mobile account is charged for the purchase. It is a true alternative payment method that does not require the use of credit/debit cards or pre-registration at an online payment solution such as PayPal, thus bypassing banks and credit card companies altogether. This type of mobile payment method, which is extremely prevalent and popular in Asia, provides the following benefits:

  1. Security – Two-factor authentication and a risk management engine prevents fraud.
  2. Convenience – No pre-registration and no new mobile software is required.
  3. Easy – It’s just another option during the checkout process.
  4. Fast – Most transactions are completed in less than 10 seconds.
  5. Proven – 70% of all digital content purchased online in some parts of Asia uses the Direct Mobile Billing method

Source: Wikipedia