Commerce on the Go: Mobile Payment Systems and Solutions

Mind Commerce LLC, November 2008, Pages: 85

Mobile payment systems have been developed in recent years to facilitate purchases of products, services, and content in mobile and electronic commerce and at physical points of sale. This study focuses on understanding and explaining the adoption of mobile payments by the two main adopter groups - consumers and merchants.

Mobile payments have been implemented with a number of ways using different technical and business models. This report deals with the essential issues, technical aspects of the most interesting solutions are covered and analyzed with a focus on their suitability for use. The acceptance of mobile payment procedures depends on many factors including usability, costs, security and convenience issues.

Despite the predicted success of mobile payments, the market remains immature in most countries. This can be explained by a number of technical and business issues. Mobile technology environments are becoming more complex, uncertain, and disruptive. This report helps the reader navigate these issues.

Target Audience:

- Mobile Network Operators
- Mobile Payment Service Providers
- Mobile Software Developers
- Mobile Security Specialists
- Mobile Web Applications Developers.
- State/Federal Finance Professionals

Selected Findings:

- Mobile payments can provide cost savings, improved cash forecasting, and straight-through processing.
- Edy from BitWallet is the market leader, accepted in more than 71,000 convenience stores, bookshops, and coffee chains as well as at vending machines.
- MoreMagic's product range enables dynamic pricing and payment of a wide variety of network services and applications over all 2G, 2.5G, and 3G networks.
- TextPayMe service is now powered by Amazon Payments. This new service allows user to send and receive money through both the mobile phone and the TextPayMe website.
- Pay-By-Touch was a privately held company which enabled consumers to pay for goods and services with a swipe of their finger on a biometric sensor.
- SmartPay provides remote payment services in China under the brand name 'Jieyin'.

Abstract 2
Introducing Mobile Payments 11
Introduction 11
Dedication 11
Definition of Mobile Payment 12
Who Is Using Mobile Payment 12
Market Drivers 12
Requirement of Mobile Payment 13
Challenges 13
Standards 13
Business Models 14
Regulatory Issues 14
Current Technology 14
Mobile Payment Characteristics 14
Simplicity and Usability 14
Universality 14
Interoperability 15
Cost 15
Speed 15
Security, Privacy and Trust 15
Cross Border Payments 15
A Generic Architecture for Mobile Payments 15
Short Message Service (SMS) 16
Unstructured Supplementary Services Delivery (USSD) 16
WAP/GPRS 17
NFC 17
Mobile Payment: Standards and Methods 18
Open Financial Exchange (OFX) 18

GOLD 19
Overview 19
The International Gold Community 19
GoldGrams 20
Standard Gold 20
Interactive Financial Exchange (IFX) 21

RFID 22
Overview 22
How does RFID work? 22
RFID Standardization 23
eCheck 24
STEP 1 - Select a Service 24
STEP 2 - Enter Information 24
STEP 3 - Accept Terms 24
STEP 4 - Complete Details 24
STEP 5 - Confirm Details 24
STEP 6 - Digital Receipt 25

Bio-Metrics 26
Overview 26
Bio- Metric Module 26
(National Automated Clearing House Association) NACHA 27
Financial Services Technology Consortium (FSTC) 28
Bank Internet Payment System (BIPS) 29
Internet Keyed Payment Protocols (IKP) 32

OpenSSL 33
Overview 33
The SSL Protocol 33
Overview 33
SSL Server Authentication 34
SSL Client Authentication 34
An Encrypted SSL Connection 34
Ciphers Used with SSL 35
The SSL Handshake 36
Short Message Service (SMS) 37

Secure Electronic Transaction (SET) 38
Overview 38
Technology 38

Smart Cards 40
Overview 40
Smart Card Standards 40
Types of Chip Cards 40
Contact Cards 41
Card Function Trade-Offs 41
Memory Cards 41
Straight Memory Cards 41
Protected / Segmented Memory Cards 42
Stored Value Memory Cards 42
CPU/MPU Microprocessor Multifunction Cards 42
Contactless Cards 43
Combination Cards 43
Operating Systems 43
Fixed File Structure 43
Dynamic Application System 43
Categories of Smart Cards 43
Integrated Circuit (IC) Microprocessor Cards 43
IC Memory Cards 43
Optical Memory Cards 44
SIM 44
STK 44
Java Card 44

Mobile Payment Solutions 45
Overview 45
Credit Card Based M-Payment 45
Mobile Payment Process 45
Data Collection 46
Use of Mediation Solutions 46
Mobile Payment Technologies 48
Biller Direct Model 48
E-Mail Billing Model 49
Consolidator Alternatives 49
Thick Consolidator Model 51
Thin Consolidator Model 52
Consumer-Centric Aggregation 52
Use of Portals 53
Service Bureau 55
Reasons to Outsource to a Service Bureau 55
Focus on core business opportunities/issues 55
Reduce Operating Costs 55
Conserve Capital 55
Speed to Market 55
Future-proof Services 56
Create a Variable Cost Structure 56
Application Service Provider 57
Invited Pull 58
Comparison of Business Models 59
Around-the-clock Availability 62
Easy User Interfaces 62
Easy and Direct Access to Historical Billing Data 62
Bill and Transaction Search Capabilities 62
Information Management 62
Multi-channel Bill Presentment 62
Multiple Payment Options 62
Consolidated Payment File 63
Tightly-integrated Bill Presentment and Payment 63
Exact Replicas of Printed Bills 63
Customized Email Notifications 63
Exception Handling of Email Notifications 63
Automated Enrollment 63
Integrated Customer Service 63
Mobile Payment Provider 64

BitWallet Inc 64
Overview 64
Fujitsu 65
Overview 65
MoreMagic 66
Overview 66
Obopay 68
Overview 68
Obopay Mobile Payment Transactions 68
Standard Obopay Fees 69
Obopay Prepaid MasterCard® Fees 70
Text PayMe 72
Overview 72
Pay by Touch 73
Overview 73
PayWi 74
Overview 74
PayPal 75
Overview 75
Fees 76
SmartPay 78
Overview 78
ViVOtech 79
The Future of Smart Payments 80
The Future of Money 81

Conclusion 82
References 83

Table of Figures
Figure 1 - A Generic Model for M-Payments Application 17
Figure 2 - RFID 22
Figure 3 - How biometrics is ideally fitted in mobile payment 26
Figure 4 - IKP 32
Figure 5 - SSL Protocol 34
Figure 6 - Biller-Direct 48
Figure 7 - Consolidator/ Aggregator 50
Figure 8 - Application Service Provider 57
Figure 9 - Paypal MobileService [Copyright: paypal.com] 75

- Bitwallet Inc.
- Fujitsu
- Moremagic
- Obopay
- Text Payme
- Pay By Touch
- Paywi
- Paypal
- Smartpay
- Vivotech

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