PAN-EUROPEAN MOBILE PAYMENT TRIAL
COULD IT KICK-START M-COMMERCE?
by Nicki Hayes, November 25, 2002
Heard the one about paying for goods with your mobile phone? Seems like a bit of
a joke doesn’t it, unless of course you live in Japan or Scandinavia where
consumers have been doing so for years. So why have mobile operators failed to get
their act together elsewhere in Europe and the USA, and when can we expect to see
mobile payment technology hit the streets there too?
Why are we still waiting for mobile commerce to arrive here in non-Scandinavian
Europe and the USA? Who can we blame? Well, while operators are the chief
suspects they are not the only ones. True they’ve failed to get their act together in
terms of agreeing on standard billing systems, and standards in general come to that,
but retailers and banks have to share some of the blame when it comes to failing to
forge any sort of agreement on a standard technical approach too. Mind you, given
that operators can’t even agree on a single technical interface through which retailers
could access customers on all networks in a given region, retailers and banks can
almost be excused for their remittance. Ultimately the first responsibility lies with
operators and it’s about time they sorted out their squabbles and kick-started m-
commerce, don’t you think?
Establishing a security standard that would ensure trust must be close to the top of
these operators agendas too if they want to encourage the wider market to adopt a
mobile payment system. Indeed, with the media, and government policy in the UK at
least, continuing to draw attention to mobile phone theft, a big question mark relating
to potential payment fraud continues to hover over the mobile wallet. And, even
though a number of technologies varying from digital signatures to fingerprint
recognition, are in development to address this issue, consumers, banks and retailers
are going to need a lot of persuasion, starting with the introduction of some kind of
common and unified security system supported by all the operators in any given
region, before mobile commerce can even make it out of the starting block.
Enter Radicchio and its European Union (EU) funded Trusted Transaction
Roaming System (T2R). Yes folks, not before time the EU has realized and acted
upon the need to boost mobile commerce. Thanks to this realization, trials will begin
next year on a project that aims to harmonize European mobile payment and security
standards. Radicchio, a not-for-profit organization, will be managing this project,
which aims to establish a single m-commerce infrastructure across Europe. It already
has the support of companies such as Vodafone, Ericsson, Visa and BT, and with
funding of around EUR60 million according to some reports, US operators are well
advised to watch closely; T2R could provide a prototype for a mobile payment system
that directly addresses these issues of network and security standards to adopt or adapt
as appropriate.
If the trial works, consumers will soon be able to quickly and safely buy products
from across Europe using their mobile phones, no matter which network they are
signed-up to. So, for example, you could buy tickets for a London West End musical
from your villa in the south of France, or a case of Bollinger direct from the vineyard
from your dressing room in a London West end theatre.
Still, let’s not get too excited, while T2R does address the major issues of operator co-
operation, cross industry co-operation, and the standardization of technical and
security infrastructures, it still leaves a lot of questions unanswered.
Top of the list for me has to be that of a standardized billing system. Premium SMS
has been promoted as an appropriate method, whereby the price for the services or
goods you are purchasing simply show up on your phone bill, but there are a number
of problems with this approach. Firstly, pre-paid customers would have to be
excluded from such services, writing off a quarter of the market in some countries,
many of which will be teenagers, a primary target audience for many of the types of
ticket-based services that are likely to use a mobile payment system.
Secondly operators are currently charging very high prices for premium SMS
services. Consumers would never accept the even higher charges operators would
need to make in order to ensure the credit card companies and retailers got their slice
of the cake too.
Such a system would also require some form of ‘text message’ to be sent, and we’ve
all been there haven’t we, stood outside the cinema alone waiting for our friend, when
suddenly the text they sent you two hours ago pings up on your phone. Such
unreliability is not going to be accepted by retailers or consumers in today’s
convenient world. And the banks and retailers are also unlikely to accept the time
lapse between purchase and payment necessitated by the end-of-month, or even
quarterly invoicing systems that most operators run.
Surely a non-SMS system is needed? This means we’ll have to wait until the roll-out
of 3G finally becomes a reality though - 3G will facilitate the sending of digitized
data directly to retailers’ systems. This could take years. Then, as always, there’s that
old chestnut, consumer confidence, something that operators need to start addressing
now with more than just blue sky advertising campaigns.
So, while the EU, Radicchio and its members are to be congratulated for such an
important initiative, mobile commerce is still not quite a reality for us poor folks in
non-Scandinavian Europe and the USA. In fact, Radicchio is, apparently, still only at
the talking stage with several operators and merchants about taking part in the T2R
proof of concept pilot, and even if they do persuade them it is not due to go live until
Q1 2003. Mind you, there could be something more positive to report in Q2. I for one
hope to be writing a congratulatory tome while sipping on a glass of chilled Bolli’
bought via my mobile phone direct from the vineyard.
Dream on…
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About the author:
Nicki Hayes is The Wireless Developer Network's (www.wirelessdevnet.com) European correspondent and the part-time judge part-time jester of its new online debate -
Holding Court. Nicki also takes on freelance writing and corporate communication projects relating to business to business internet and wireless issues and has
contributed editorial to a number of publications including Unstrung.com, Wireless Business & Technology, Guardian Online, Financial Times, Banking &
Financial Training, eAI Journal and Secure Computing.
About the WirelessDevNet (www.wirelessdevnet.com):
The Wireless Developer Network is an on-line community for information technology
professionals interested in mobile computing and communications. Our mission is to assist
developers, strategists, and managers in bridging the gap between today's desktop and
enterprise applications and tomorrow's mobile users communicating via wireless networks.
We are interested in supporting the deployment of these evolving technologies through
high-quality technical information, news, industry coverage, and commentary. This
information is provided within a true on-line community that supports developer/vendor
dialogue through message boards and user-submitted tips, articles, links, and software
downloads.
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