Mobile Payment Magazine

Mobile Web Payments (WAP)

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The consumer uses web pages displayed or additional applications downloaded and installed on the mobile phone to make a payment. It uses WAP (Wireless Application Protocol) as underlying technology and thus inherits all the advantages and disadvantages of WAP. However, using a familiar web payment model gives a number of proven benefits:

  1. Follow-on sales where the mobile web payment can lead back to a store or to other goods the consumer may like. These pages have a URL and can be bookmarked making it easy to re-visit or share with friends.
  2. High customer satisfaction from quick and predictable payments
  3. Ease of use from a familiar set of online payment pages

However, unless the mobile account is directly charged through a mobile network operator, the use of a credit/debit card or pre-registration at online payment solution such as PayPal is still required just as in a desktop environment.

Mobile web payment methods are now being mandated by a number of mobile network operators.

A number of different actual payment mechanisms can be used behind a consistent set of web pages.

Direct Operator Billing

A direct connection to the operator billing platform requires integration with the operator, but provides a number of benefits:

  1. Simplicity – the operators already have a billing relationship with the consumers, the payment will be added to their bill.
  2. Instantaneous payments giving the highest customer satisfaction
  3. Accurate responses showing success and reasons for failure (no money for example)
  4. Security to protect payment details and consumer identity
  5. Best conversion rates from a single click-to-buy and no need to enter any further payment details.
  6. Reduced customer support costs for merchants since customers will complain to the operator.

It has however a drawback, the payout rate will be much lower than with other payment providers. Examples from a popular provider :

  • 92% with Paypal
  • 84 to 86% with Credit Card
  • 45 to 91.7% with Operator billing in the US, UK and different smaller european countries, but usually around 60%
  • However, there is in the world one exception to this rule, in UK it might give more payout percentage for a merchant to bill through the Payforit system than with a credit card.

Credit Card

A simple mobile web payment system can also include a credit card payment flow allowing a consumer to enter their card details to make purchases. This process is familiar but any entry of details on a mobile phone is known to reduce the success rate (conversion) of payments.

In addition, if the payment vendor can automatically and securely identify customers then card details can be recalled for future purchases turning credit card payments into simple single click-to-buy giving higher conversion rates for additional purchases.

Online Wallets

Online companies like PayPal, Amazon Payments, mHITs and Google Checkout also have mobile options. Here is the process :

First Payment

  • User registers, inputs his phone number, the provider sends him a SMS with a PIN
  • User enters the received PIN, authenticating the number.
  • User inputs his credit card info (or another payment method) if necessary. (Not necessary if account already existing) and validates payments

Subsequent payments :

  • The user re enters his PIN to authentify

Requesting a PIN is known to lower the success rate (conversion) for payments. These systems can be integrated with directly or can be combined with operator and credit card payments through a unified mobile web payment platform.

Source: Wikipedia

New Mobile Banking via SMS in Jamaica

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Anyone with a mobile phone can now bank on the go, thanks to FirstCaribbean International Bank’s Mobile Banking service. Customers of FirstCaribbean can do their banking via SMS text messaging and immediately receive their account information via return SMS text.

After a successful launch of this new service in Barbados, Cayman, and the Eastern Caribbean Islands, FirstCaribbean is making this service available to Jamaica customers starting today.

With FirstCaribbean Mobile Banking, customers can:

  • Request their account balance
  • Request the last 5 transactions that occurred during the past 30 days.
  • Transfer funds between their accounts
  • Set up weekly account balance alerts
  • Set up threshold alerts.  For example, they can set an alert to come to them if their account balance falls below a certain amount or if it goes above a certain amount.

FirstCaribbean’s Chief Marketing Officer, Peter Steenveld, noted that the new service means the bank’s customers can now do their banking anywhere, at any time and on the go. “What’s so exciting about our service is that you can access it on any type of mobile phone. You don’t need to have one of the latest models of smart phone to be able to use our mobile banking service. Any phone that can send or receive text messages will put your latest account information right in the palm of your hand. Our service is safe, convenient, and it’s fast, so there’s no waiting for web pages to download.”

Customers signing up for FirstCaribbean Mobile Banking can access up to 6 of their Checking or Savings accounts, and is available to customers of any mobile phone service provider. SMS charges will be the same as what any customer would pay for their cellular service provider for text messages.

Apart from being convenient and easy to use, FirstCaribbean’s Mobile Banking service is safe.  Stringent security measures are in place to protect their customers’ financial information and details.  Text messages will only be sent to the mobile phone number that is registered with the bank by the customer, who must verify his/her identity at the time of registration. Account details or any financial information will not be sent to any third party.  Account numbers are never sent to the mobile phone.

Director, Retail, Wealth & Small Business Banking in Jamaica, Christopher Denny added: “Our staff participating in the pilot this new service, loved it. We received many positive comments about the speed and convenience of the service. One feature that was particularly well received was the balance threshold alerts. People testing the service were pleased to be able to get an alert when they received a deposit – for example when their salaries were deposited to their accounts – or if their balances went below a certain limit, and then to be able to transfer from one account to the other – all without setting foot in the bank!”

FirstCaribbean is not charging any fees for the Mobile Banking service.

Source: FirstCaribbean

Near Field Communication (NFC)

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Near field communication or NFC, is a short-range high frequency wireless communication technology which enables the exchange of data between devices over about a 10 centimeters (3.9 in) distance.

The technology is a simple extension of the ISO/IEC 14443 proximity-card standard (proximity card, RFID) that combines the interface of a smartcard and a reader into a single device. An NFC device can communicate with both existing ISO/IEC 14443 smartcards and readers, as well as with other NFC devices, and is thereby compatible with existing contactless infrastructure already in use for public transportation and payment. NFC is primarily aimed at usage in mobile phones.

Near Field Communication (NFC) is used mostly in paying for purchases made in physical stores or transportation services. A consumer using a special mobile phone equipped with a smartcard waves his/her phone near a reader module. Most transactions do not require authentication, but some require authentication using PIN, before transaction is completed. The payment could be deducted from pre-paid account or charged to mobile or bank account directly.

Mobile payment method via NFC faces significant challenges for wide and fast adoption, while some phone manufacturers and banks are enthusiastic, due to lack of supporting infrastructure, complex ecosystem of stakeholders, and standards.

NFC vendors in Japan are closely related to mass-transit networks, like the Mobile Suica used on the JR East rail network. Osaifu-Keitai system, used for Mobile Suica and many others including Edy and nanaco, has become the de-facto standard method for mobile payments in Japan. Its core technology, Mobile FeliCa IC, is partially owned by Sony, NTT DoCoMo and JR East. Mobile FeliCa utilize Sony’s FeliCa technology, which itself is the de-facto standard for contactless smart cards in the country.

Other NFC vendors mostly in Europe use contactless payment over mobile phones to pay for on- and off-street parking in specially demarcated areas. Parking wardens may enforce the parkings by license plate, transponder tags or barcode stickers. First conceptualized in the 1990s, the technology has seen commercial use in this century in both Scandinavia and Estonia. End users benefit from the convenience of being able to pay for parking from the comfort of their car with their mobile phone, and parking operators are not obliged to invest in either existing or new street-based parking infrastructures. Parking wardens maintain order in these systems by license plate, transponder tags or barcode stickers or they read a digital display with their eyes in the same way as they read a pay and display receipt.

Source: Wikipedia (1), (2)

Consumer Versus Merchant Initiated Mobile Payment

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Payments can be initiated by both the consumer or the merchant, although consumer payment is becoming the most common since it suits the personal nature of mobile devices.

  1. Consumer focused – The consumer chooses to make a mobile payment. They interact with the payment server using their mobile device to authenticate and authorize the payment. They are subsequently presented with status showing confirmation of the successful transaction or failure with a reason. Extensions to this include Near Field Communications or Contactless Payment options using additional hardware built into the mobile phone.
  2. Merchant focused – This is similar to the consumer focused scenario, however the transaction is entered and completed by the merchant (or their representative). This is similar to Mobile EFTPOS except it is processed via a mobile phone/device.

Source: Wikipedia

Trunkbow International Holdings Limited

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Trunkbow International Holdings, is a provider of Mobile Payment Solutions (“MPS”) and Mobile Value Added Solutions (“MVAS”) in China.

Trunkbow’s solutions enables the telecom operators to offer their subscribers access to mobile applications,  tools, value-added services that create a superior mobile experience, and as a result generate higher average revenue per user and reduce subscriber churn.

Since the company’s inception in 2001, Trunkbow has developed a significant market presence in both the Mobile Value Added and Mobile Payment solutions markets. Trunkbow supplies to all three Chinese mobile telecom operators, as well as re-sellers, in several provinces of China.

More information: Trunkbow International Holdings

BilltoMobile Provides Direct Mobile Billing for Online Purchases by AT&T Wireless Customers

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Online purchases can be billed directly to existing AT&T wireless service accounts, with the new agreement between BilltoMobile and AT&T.

BilltoMobile will provide its Direct Mobile Billing payment service to AT&T’s wireless subscribers as part of a trial service.

“We’re excited to collaborate with AT&T and offer their customers the benefits of a convenient, user-friendly mobile payment solution,” said Jim Greenwell, CEO, BilltoMobile. “This form of billing is the logical next step in the e-commerce mobile payments landscape.”

BilltoMobile’s growing list of participating online merchants will provide AT&T subscribers with access to mobile payments on several top online digital goods and services sites.

BilltoMobile continues to attract major online merchants with its secure Direct Mobile Billing approach. Merchants find that offering mobile payments drives significant incremental revenue from a wide variety of consumers and for a lot of different reasons including convenience, security and accessibility.

BilltoMobile provides a secure payment option for mobile-centric consumers, and the interface requires no registration, no set up, no application or downloads and no association with other financial instruments, such as credit or bank cards. Purchases completed with participating merchants are secure, and take only two steps and a few seconds to complete.

More information: BilltoMobile.com.

Source: BilltoMobile

Mobile Payment Service Provider Model

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The four potential mobile payment models:

  1. Operator-Centric Model: The mobile operator acts independently to deploy mobile payment service. The operator could provide an independent mobile wallet from the user mobile account(airtime). A large deployment of the Operator-Centric Model is severely challenged by the lack of connection to existing payment networks. Mobile network operator should handle the interfacing with the banking network to provide advanced mobile payment service in banked and under banked environment. Pilots using this model have been launched in emerging countries but they did not cover most of the mobile payment service use cases. Payments were limited to remittance and airtime top up.
  2. Bank-Centric Model: A bank deploys mobile payment applications or devices to customers and ensures merchants have the required point-of-sale (POS) acceptance capability. Mobile network operator are used as a simple carrier, they bring their experience to provide Quality of service (QOS) assurance.
  3. Collaboration Model: This model involves collaboration among banks, mobile operators and a trusted third party.
  4. Peer-to-Peer Model: The mobile payment service provider acts independently from financial institutions and mobile network operators to provide mobile payment.

CashEdge

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CashEdge enables financial institutions to provide a single point of access for multiple consumer and small business transfer capabilities such as account funding, me-to-me transfers, third-party transfers, person-to-person payments and small business payments and invoicing.

CashEdge has provided online funds transfer services to financial institutions for nearly ten years and, today, provides its Intelligent Money Movement services to hundreds of financial institutions, including the majority of the nation’s largest banks. The company gathered more than $4.5 Billion in new assets for financial institution clients through its account opening and funding products and processed nearly $50 billion in online funds transfers in 2008. CashEdge’s Intelligent Money Movement Platform uses a combination of proprietary software, payment processing, and risk management capabilities.
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Starbucks Mobile Payment Test Expands to New York City

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Starbucks today announced the expansion of its Starbucks Card Mobile payment test to nearly 300 company-operated stores in New York City, and Nassau and Suffolk counties on Long Island. This builds on the successful launch of Starbucks Card Mobile App for select BlackBerry smartphones, iPhone and iPod touch, and the Starbucks mobile payment test which started in fall 2009. Now, Starbucks next mobile move will offer customers in the New York City area an enhanced Starbucks Experience, including the ease and convenience of paying for their favorite Starbucks beverage with their mobile phone.

“Mobile technology is part of our customers’ daily routine and with the expansion of mobile payment in our test cities, we’re seeing more and more customers using their smartphones as their mobile wallets,” said Brady Brewer, vice president Starbucks Card and Loyalty. “We’ve heard from our customers on My Starbucks Idea that they want a faster, more convenient way to pay. Now we’re inviting customers in New York City and Long Island to experience mobile payment and the fastest way to pay at Starbucks. Mobile is just one of the ways we continue to innovate and enhance the experience for our customers.”

In response to customer feedback, the Starbucks Card Mobile App was first developed for select BlackBerry smartphones and iPhone as these devices are used by more than 71 percent of Starbucks smartphone-carrying customers. To experience mobile payment at participating New York City-area Starbucks, customers just need to download the free Starbucks Card Mobile App on their supported BlackBerry smartphone, iPhone or iPod touch. In addition to the mobile payment feature, the app allows customers to manage their card account, reload their card balance directly from their smartphone with a major credit card, check their My Starbucks Rewards status, or find nearby Starbucks stores. With the Starbucks Card Mobile App, customers will have a barcode on their screen that they’ll hold in front of a 2-D scanner on the counter to pay for their purchase.

The expansion of mobile payment into New York City builds on the successful test program currently in 16 stores in Seattle and Northern California and at more than 1000 Starbucks in U.S. Target stores. The overall Starbucks Card program is experiencing impressive growth and performance, and currently almost one in five of all in-store transactions are paid for with a Starbucks Card, an activity made even more convenient with the introduction of Starbucks Card Mobile App. Customers are on track to load more than $1 billion on Starbucks Cards this year, and at the end of the third quarter, sales of cards were up 17 percent over last year and the reload on existing cards was up more than 59 percent compared to last year.

“With the expansion of mobile payment to New York City, we expect to see more and more customers trading their plastic Starbucks Cards for the digital version on their mobile phone. In addition to the payment capability, customers can also keep track of their My Starbucks Rewards status and reload their card while they are on the way to Starbucks or in line,” said Brewer. “Expanding our mobile footprint gives our customers a new way to connect with Starbucks on the go and transforms the way customers experience their Starbucks Card through the mobile app.”