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Emerald Group Publishing Limited
Copyright © 2002, MCB UP Limited
The way to pay
The way to pay
The Mobey Forum was established in May 2000 to develop and promote mobile technology in financial services and to formulate a secure, user-friendly solution to the issue of mobile payments. According to recent research, there will be over 270 million European mobile subscribers by 2003 and it is Mobey Forum's intention to ensure that, across the globe, users will be able to pay for goods and services as universally with their phones as they can with their credit cards or debit cards today.
The forum aims to encourage the use of mobile technology in financial services such as payments, remote banking and brokerage. Over the last year, members have worked to develop what they believe is the most viable solution for mobile payments.
In June 2001, the forum unveiled its preferred payment architecture. Developed with the major mobile manufacturers and financial services giants, the architecture encompasses remote and local payment methods.
It is envisaged that some banks will initially concentrate on the first step for remote payments: a server-based "wallet". The second step is to incorporate EMV-based (Europay, MasterCard and Visa) solutions for local payments. The preferred architecture to satisfy both remote and local needs is to have a dual-chip phone (one for the mobile service, as today, the other issued by the bank). This ensures that the payment method is secure, easily implemented and independent of the telecom provider. This, importantly, allows the user to change their service provider without affecting their ability to continue making payments. It uses much of the existing technology implemented by financial services providers, and member banks are conducting a series of trials at the moment. Results are due by the middle of this year.
Consumers have traditionally viewed electronic payments with some suspicion with regard to security. Individual users across the world are aware of the convenience of being able to pay for goods and services (e.g. taxi rides, shopping or the utilities bill) from their mobile, but they need to be confident that their details cannot be captured, and subsequently used fraudulently. They will also, naturally, wonder what happens, if they lose their handset.
Mobey intends to ensure that m-payments are quicker and more convenient than existing alternatives. The forum members envisage a user treating their handset as a mobile wallet, encapsulating payments, receipt storage, electronic ticketing and even promotional coupons. Stored on the second chip built into the handset would be the authentication and payment software, activated when the user wishes to make a purchase.
For a local payment, the local and mobile devices would connect, the value would appear on the screen and a choice of payment options would be presented. Having chosen the payment method, the purchase is confirmed with the user's PIN number. The vendor and the supplier of the payment method for future reference would store all details of the transaction. In addition to providing an electronic receipt for buyer, vendor and bank, the system will also reduce the instance of "charge back" (where transactions are successfully challenged by the card-holder), a significant feature in today's insecure e-commerce environment.
Remote payments would be handled in a similar fashion but, where micro transactions are involved – possibly under ten euros, it may be that a lower level of security is required to aid ease of use. If larger sums were being transferred, the more robust form of encrypted authentication and PIN use would be required. In both cases, ease of use, security and speed are the crucial factors.
The m-commerce marketplace is expected to grow rapidly over the next five to ten years and figures from Forrester Research suggest that world-wide revenues generated by m-commerce will reach £140bn by 2005. Mobey Forum's recommendations will play a key role in facilitating the implementation and uptake of one of the corner-stones of mobile commerce, m-payments. Working closely with the European standardisation bodies, it aims to ensure that a marketplace fragmented by a multitude of competing standards can be avoided.