Making mobile-payment friendlier

Making mobile-payment friendlier

By KEITH LOUTIT

THE emergence of new electronic media has opened large and previously unreachable geographic markets to merchants, enabling a variety of new, low-value products to thrive - music, video, mobile games, ring tones and wallpaper. The process of charging subscribers for these products has been far less straightforward.

The crux of the challenge lies in the difficulty of charging for low-value transactions to a youth demographic with limited access to credit. As most common forms of payment - credit cards and cash - are unavailable or impractical for small-value electronic transactions, merchants globally have resorted to 'creative' means of collecting payment. These include e-wallets, points systems and Interactive Voice Response (IVR) systems, often combining technologies to deliver a simple electronic product.

The subscriber's mobile phone account offers the most logical solution to this dilemma. Consumers enjoy long-term relationships with their mobile operators, their accounts can accept low-value transactions and be charged for an array of products, which appear on their phone bill.

The success of Premium SMS (PSMS) as a payment instrument is the result of universal adoption by handset manufacturers and operators, the easy communication it offers young people and its ability to accept low-value payments from this otherwise difficult-to-reach youth market.

Challenges exist

But challenges exist for operators and merchants. The delivery or receipt of each SMS is tied to payment, making service provisioning extremely complex. Merchants must be assigned multiple short codes and keyword combinations for each price point. PSMS is ideal for mobile content, yet restricts the flexibility of merchants to design intuitive web and WAP payment processes.

The success of PSMS prompted operators to develop a range of 'next generation' payment platforms, enabling merchants to charge subscribers directly from their mobile phone accounts without PSMS. These solutions offer greater flexibility for merchants to charge consumers at various price points, without the complexity of short code and keyword assignments. Operators can now use these payment platforms to accept a range of mobile and non-mobile transactions. However, these operator billing systems must collaborate smoothly for each to be individually successful.

In 2004, Simpay - the mobile payment scheme founded by Orange, Telefonica Moviles, T-Mobile and Vodafone - announced an interoperability platform focused on accepting low-value payments. Set to be released in mid-2005, Simpay was to charge subscribers' mobile phones without PSMS. But 18 months later, one of Simpay's key European founders withdrew, followed by others.

The industry essentially needs a unified global m-payments solution that will help operators and merchants realise the full potential of m-commerce.

Challenges to m-payment interoperability stem from two primary factors.

# The complexity and diversity of each operator's billing system makes the barriers to cross-operator charging insurmountable for most merchants. Each operator billing system has unique interfaces, security protocols, available price points and levels of operator control.

# There are differing perspectives on subscriber charging. Operators typically charge only their own subscribers, offer different features and functionality, and exert various levels of control over the merchant's use of their platforms. Merchants, on the other hand, seek a single interface to charge subscribers of any network for products of any kind, at any available price.

To reconcile these opposing viewpoints, a new payment solution is required to encourage widespread adoption and add value to operators and merchants, without requiring operators to drastically change their billing systems.

A new solution addresses the two key challenges to interoperability via aggregation - combining many billing systems into one - and mediation, which reduces the disparity between operators' various billing systems. The solution helps operators enforce control over merchants' use of their platforms to ensure protection for consumers and maximal billings for operators and merchants.

Operators benefit from aggregation and mediation as they become part of a larger global charging community that attracts local and international merchants. A single connection interface helps operators compete with other payment types, such as credit cards and e-wallets. The solution must be able to offer operators the tools that validate merchant accounts which are configured according to operator agreements and provide access to reports on traffic running across their network.

Single interface

With a single interface, merchants are able to charge subscribers from any connected operator, design 'friendlier' purchase experiences and charge the elusive youth market for low-value transactions. As the new solution enables merchants to operate across operators and geographic boundaries, this allows them to take control of their own promotions and go 'off portal' by lifting them out of co-branded, exclusive operator relationships.

The result should be increased traffic and subsequent revenues for merchants and operators, as traffic volumes become limited only by the merchant's promotional power.

The writer is director, global applications, Mobile 365