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M-payment—an open book: globally agreed m-payment standards are a long way off but do we need them anyway? - The Wireless Business Model
Telecommunications International, Oct, 2002 by Matthew Secker
Secure, convenient and easy-to-use mobile payment solutions are vital to the success of m-commerce and the future prosperity of mobile operators. After all, if operators are to continue to grow as businesses, end-users need to do more with their devices than just voice, and one of the most natural things for them to do--along with talking to each other--is to transact.
Due to this, mobile operators have to make sure that there are a large number of consumers who have access to an effective m-payment service. Only by doing this will a significant number of retailers decide to take the plunge into m-commerce. And if there are a lot of merchants offering a diverse range of services--via a decent m-payment solution--consumers will eventually be drawn to transacting through their mobile phones.
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But effective and widespread foundational m-payment standards aren't in place on a national level--let alone on an international scale. For example, if a content provider in the UK wants its offerings to be directly accessible to the entire national mobile operator subscriber base, they'll have to engage individually with five operators (soon to be six with Hutchison 3G) and all with differing billing systems.
Consequently, it is argued that a set of global foundational m-payment standards need to be agreed upon in order for content providers to reach a critical mass of paying customers who, in turn, will then have a plentiful supply of applications and services to choose from.
The Mobile Payment Forum, an open and cross-industry organisation--comprised of over 100 members from the payments and mobile industries, including telcos, handset manufacturers, banks, payment companies and software vendors--has been formed to achieve this very goal.
"A standardised foundation must be put in place before m-payment solutions can be widely deployed," says Joe Chouinard, co-president of the Mobile Payment Forum. "This can be achieved--not through trying to create a single protocol payment standard--but by defining what protocols operators need to use in order to support different payment methods."
Chouinard uses the example of the PC internet space where capabilities such as SSL (secure sockets layer), PKI (public key infrastructure) and digital certificate handling are underway and capable of supporting many different payment solutions. He says that the Mobile Payment Forum is continually working to define the foundational standards necessary to support varying payment solutions.
Anil Malhopra, chief alliances officer for Bango.net, a payment technology provider, also agrees that the industry will eventually standardise the base element components of the m-payment process (such as security and identification). He also believes that there will never be one single global payment system due to the nature of competitive business, which means 'that new and better ways of billing will always be coming into the fold'.
Are m-payment standards achievable?
It is fair to say that a globally agreed and deployed foundational set of m-payment standards will be complex and difficult to achieve. In fact, one could be forgiven for thinking that it isn't realistic. Not so, says the Mobile Payment Forum's Chouinard who argues that it has been done for chip cards, the internet and other technologies, and 'so it can and will be doable for mobile payments'.
Nevertheless, he does acknowledge that internationally deployed m-payment foundations will take a prolonged time to achieve and is a very daunting prospect due to the plethora of technologies (such as GSM, CDMA, GPRS, WCDMA, SMS, USSD, WAP and i-Mode).
Tray Elvarez, director of corporate marketing for Encorus Technologies, a software company working in the wireless payments space, is also confident that m-payment standardisation can be agreed. But he does say that it will take a long while and cites the fact that it took 25 years until ATM machines were formulated to the extent that they were interoperable between different banks. "And agreements need to be reached between a lot of different groups in the m-payment arena--including customers, merchants, operators and financial institutions," he adds.
Meanwhile, Bango.net's Malhopra also supports the view that it will be an elongated process until a complete m-payment foundational standard is agreed between competing companies. "It will certainly be a long time until NTT DoCoMo and Vodafone openly agree upon something like this," he says.
Proprietary initiatives and partnerships
Due to the fact that it will be a long way off until we see a globally agreed foundational set of m-payment standards, there are mobile operators (such as Vodafone) that have proprietary initiatives underway.
"The committee-based approach [such as the Mobile Payment Forum] where they talk for a very long time and hopefully agree upon a consensus isn't something that we can indefinitely wait for [although its important that they persist with their endeavours]," says Jim Wandsworth, senior manager for commerce third-party product and capabilities, Vodafone UK. "The alternative is a more pragmatic approach and that is to actively get things moving ourselves, and then widen the participation and involvement over a period of time."
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