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Published on July 2nd, 2007 | by Babar Bhatti


3G Killer App – Mobile Payments

Some consider financial transactions as the most likely killer application of 3G mobile services, just as text messages were for 2G. Interestingly many companies are taking the approach of using text messaging to offer mobile payment services – description of mobile payments Pakistan and India below fit this description. On the other hand the high-tech hardware-based approach from Korea is to use special chips (USIM) into handsets which allows data communication for payment with other devices.

As you can see the industry is in a test-and-see phase. There will be competing standards and incompatible solutions till there’s a winner. I will revisit this topic after some time to re-evaluate the progress of these services and direction of the industry. Here’s a review of various mobile payment or m-commerce services from around the world.

orion.jpgIn Pakistan a new SMS based payment solution from UBL called Orion was recently introduced. Each transaction is protected by a secret PIN which offers basic security. This is a good start as UBL has kept things simple enough that common users will not be overwhelmed. See the fee schedule here. Usually such solutions come from mobile phone or value-added-services companies but in this case UBL has taken the lead. It will be interesting to see the uptake of this and how user issues are resolved. There are other startups as mentioned here at G&W but their solutions are not widely deployed yet.

A similar solution has been launched in India where PayMate has launched India’s first purchase-by-text system, which allows purchases from SMS enabled mobile phone at accredited merchants. An authorisation of payment via PIN is needed. This is available to those who have account with Citibank and Corporation Bank in India.

EU A new online and cell phone service called Voice Pay, uses biometric voice analysis to authenticate users. The company says its technology is so reliable that it will guarantee all payments. Details are Here. Sounds like a complicated procedure to me!

 US Verizon that tied up with Obopay to offer wireless payment to subscribers through mobile phones. This service acts as a virtual MasterCard account. The only condition: the mobile phone should support the BREW standard so that it can download and install a mobile client that keeps track of a bank account. Product search and comparison facilities have also sprung up to aid the mobile shopper.

Philippines One of the largest and arguably most successful m-Commerce applications are to be found in the Philippines with over 3.5 million m-Commerce users on the two major networks: GLOBE Telecom and SMART Communications. In a study of m-commerce market in developing countries such as Philippines, it was identified that the key success factors for that market included the ability to load prepaid airtime credits as well as the ability to transfer both cash and airtime credits between customers. Read the full report here.

Korea Lets wrap up with an article from Korea Herald which gives a good summary of the mobile payment developments there.

The upcoming 3G era will promise safer and more convenient wireless payment because the USIM chips in 3G technology allow constant monitoring of credit card information. The 3G wireless payment is based on partnerships between mobile operators and card companies.

KTF is working on a solution to enable Paying by mobile phone, anywhere in the world. It plans to introduce a trial mobile payment service in October 07. SK Telecom is preparing a similar service, but its debut will likely come later. KTF joined a global mobile payment project in conjunction with 13 other mobile operators during the 3GSM World Congress.

The GSM Association decided to adopt the KTF-proposed Pay-Buy Mobile initiative in February. An additional 10 operators, including the world’s largest handset maker Nokia, joined the Pay-Buy Mobile initiative in April this year. There is, however, remaining work to be done to facilitate a free and truly global wireless payment, as authentication processes vary according to country, operator and financial institute.  

More from the news article:

KTF’s proposal is to insert Universal Subscriber Identification Module chips, or USIM chips, into handsets and allow a payment device to read users’ information inside the phone, using a technology called Near Field Communications or NFC, allowing mobile phones to act like virtual cards.

NFC is much like the Bluetooth and radio frequency identification or RFID short-range communication technologies, but the technology is better in that it enables data communication between electronic devices, if not necessarily tapping or touching, within a 10-centimeter radius.

Philips first developed NFC, and currently some operators, such as Japan’s NTT DoCoMo, are implementing mobile payments using the technology.

When commercialized, credit card companies can issue wireless cards with Over The Air technology, without having to physically produce plastic cards and sending them to users. When credit card members want to change their handsets, they can simply change the USIM chips so that they can keep their credit card memberships.

Currently, over 12 million handsets are equipped with a mobile payment function and 80,000 compatible payment reading devices are in place across the country.

The Pay-Buy Mobile project includes Cingular Wireless, China Mobile, Orange, Norway’s Telenor, Sweden’s TeliaSonera, Italy’s Telecom Italia, South Africa’s MTN, Iran’s MCI, Canada’s Rogers Wireless, the Philippines’ Smart Communications, Denmark’s KALL, Turkey’s Turkcell, Russia’s Vimpelcom and Japan’s NTT DoCoMo. It also includes credit card companies such as MasterCard Worldwide and handset makers such as Samsung Electronics and LG Electronics.

This certainly sounds promising and is worth keeping an eye on.

About the Author

Founder and Editor of TelecomPk.net

One Response to 3G Killer App – Mobile Payments

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