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Mobile Payments - Collaboration is the Key

Mobile Payments - Collaboration is the Key

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Published by Richard Pearson

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Published by: Richard Pearson on Jan 06, 2012
Copyright:Attribution Non-commercial


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 ==== ====For A Great Mobile Marketing Tips Check This Outwww.mobileexamples.com ==== ====In theory, the concept of mobile payments has a strong business case, given the high marketpenetration rates of mobile devices, such as cellular phones and PDA?s, in many parts of theworld. In addition, mobile operators and financial institutions, through the use of these devices,envision an attractive way to enable their customers to make payments. On the consumer side,users can reap the benefits of convenience, permitting them to buy goods and services from anylocation. In principle, a mobile device can be used as a POS (point of sale) tool. Mobile operators andfinancial institutions consider this concept as the next logical step in making mobile devices atrusted payment device for consumers, acting as a payment instrument supplementing cash,cheque, credit card and debit card. Currently, financial institutions are rolling out wireless POS capabilities to merchants which are in-turn competing with a consumer?s mobile phone. Several new services have been introducedaround the world in which merchants are accepting payments from wireless POS terminals. Thesewireless POS terminals, for example, allow merchants to offer home delivery services in whichpayments are presented and accepted upon delivery of goods or services at the consumer?slocation. Wireless POS terminals use the wireless networks of mobile operators to send paymentinstructions to a merchant acquirer?s payment server. Consequently, wireless POS services areclassified as an extension of traditional payment services. Given that in some areas of the worldalmost everyone will soon own a mobile phone, and most merchant locations offer POS terminalsas a form of payment, it is at least conceivable that the mobile device will take over a large part ofthe retail payment market. Since wireless POS implementations are an extension of current payment infrastructures, usersstill need to use a credit or debit card to make purchases. The convenience associated withcurrent wireless POS methods have to do with the fact that these terminals are brought to thelocation of the purchase. For example, in a restaurant environment with the user paying for theirbill via debit card from their seat, or for their groceries which have been delivered to their frontdoor. Mobile devices enable the use of numerous services, services that do not need card readers,personal computers, and modem combinations or a merchant?s wireline POS terminal.Nowadays, mobile devices have an embedded chip that can be used to store information andprovide secure authorization and identification. The Need for Interoperability
 But to make these services available to the majority of mobile users, mobile payment serviceproviders need to roll out services that offer interoperability. There have been numerous mobilepayment pilots conducted that enable mobile devices to be used as a payment option, some ofwhich have advanced into full mobile payment services (e.g. PayPal, PayBox, MovilPago). Todate, we?ve discovered that the key to providing a successful mobile payment service has to dowith the benefits it gives the end user and the end user's customers: convenience, security, andfreedom being a few key elements. Though the industry has a long way to go before mobile devices will become a consumer?spayment instrument of choice, to ensure the stability of a viable mobile payments infrastructure,collaboration is the key. Both mobile operators and financial institutions have tried, with little success, to implement theirown individual pilot projects. Both parties have encountered numerous difficulties. Mobileoperators, for example, because of their extensive existing customer base, technical know-howand billing comprehension, seemed the most likely candidates to provide mobile paymentservices. However, problems associated with risk management and the collaboration of numerousproviders needed to accomplish interoperability have arisen. Financial insitutions on the otherhand are confronted with a limited number of users and high infrastructure costs. To remedy theseproblems, mobile operators and financial institutions have begun collaborating to jointly offermobile payment services to their customers. For instance, leading Dutch direct bankING/Postbank Nederland, has partnered with the Netherlands number three mobile carrier Telfort,to offer users mobile access to the bank?s retail applications and link user bank accounts toTelfort?s prepaid service top-up capabilities for account recharging. In this case, the fact thatthese two entities are taking advantage of their natural symbiosis is a big step in the right direction. Right now there are four entities needed to make a payment via credit card (acquirers, issuers,merchants and consumers) to make a payment via mobile device, there are five (mobile operators,acquires, issuer, merchant and consumers). As a result, the ideal business model includes thecooperation between mobile operators, financial institutions, technology suppliers and industryassociations to create a certain amount of standardization which will ensure the successfulimplementation of a strong mobile payments infrastructure. Still, numerous issues, including limited functionality available through the current generation ofnetworks as well as a lack of standards to name a few, are still hampering the efforts being carriedout by these industry players. In addition, questions regarding successful revenue generatingbusiness models also remain. Conclusion As mentioned earlier, cell phone and PDA penetration rates are higher then they've ever been,with forecasted growth rates showing exponential increases in consumer adoption. Accordingly,industry focus should be centered around the business side. Right now it is not feasible for amobile operator or a financial institution to role out competing services on a proprietary model thatdoes not include interoperability. Mobile operators and financial institutions must work together toimplement mobile payment services that marry a consumer?s bank account with their mobilesubscription. Offering payment services should not be seen as a competitive advantage, but rather
as a necessity which will drive the success of the rollout of mobile commerce. Today we see several initiatives taking place including the creation of various industryassociations designed to address the different issues associated with the mobile industry. Withthese activities underway-mobile operators and financial institutions are beginning to worktogether to roll out new payment services. Pre-paid top up, for example, is the first real commercialmobile payment application that is being introduced into several markets. Financial institutions andmobile operators are collaborating to enabling mobile subscribers to electronically pay for theirpre-paid wireless accounts using several banking channels such as telephone banking, Internetbanking, and ATM and mobile banking, completely automating the ?top-up? experience usingSMS (Short Message Service). Currently, payment instruments are stored in virtual wallets residing either on the mobile device orcentralized on the open network service platform. Consumers register for the service through theirfinancial institution, mobile operator or service provider, depending on how the service is setup.The registration is necessary to link the consumer?s subscription data with their financialinformation and provision the mobile device for the service. Future methods may see users usingtheir mobile device as a way to simply access their bank accounts, whereby the mobile operator?sfunction will be simply to transport the data. In addition, smart cards issued by financial institutionsmay begin to become more prevalent. As mobile services and infrastructures evolve we will begin to see the true notion of mobilepayment instruments living up to the hype of ?anytime, anywhere payments.? Soon, mobilepayments will become an integral part of consumer lifestyles, replacing the payment instrumentswe have hidden in our wallets today. It is clear, that the co-operation between mobile operatorsand financial institutions is needed to build a viable mobile payments offering. It is also clear thatthe next logical payments industry step is to provide consumers with the ability to make paymentsfor goods and services on their mobile devices. The only true concept of ?anytime anywherepayments? is conceivable through access via a mobile device. 'Where there's a wireless, there's away' and the key to the success of the industry is as simple as giving consumers what they want.  Article Source:http://EzineArticles.com/?expert=Torbjorn_Zetterlund  ==== ====For A Great Mobile Marketing Tips Check This Out

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