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Mobile Payment PDF
Mobile Payment PDF
channel?
Toan Do Tan Tran Vinh Nguyen
Since thousands year ago, people have been creating the method to
exchange valued goods, from direct goods exchange to intermediate exchange and
then invented the money. From using stone or shell even paper money to make
transaction, now people can easily to use some kind of virtual money like a plastic
card (called debit or credit card) or a computer to finish a trading transaction. From
several years ago, a new term was strongly concerned by both technical side and
business side about new way to make a payment, it is about mobile payment. Many
predictions show that, mobile payment could quickly change the way we do
business and the volume of payment transaction via this technology could touch
hundred billions US dollar in next years. Even though this trend still has many things
to proof how people expect from it.
The evolution
Because of struggling for existence, from primitive age, people tried to find the
way for communication and made a good exchange. Used smoke as signal to inform
other in hunting or in the war; exchanged directly between meat and rice are very
clearly example about communication and payment in Stone Age. It was also a
background idea for the evolution of payment technology in modern society.
Along with human development, the demand of trading increased quickly.
Directly goods exchange or event using some natural materials as intermediate
goods exchange also had many limitation and barriers when making a big or
complicate transaction. By discovering the metal, mining technique and foundry,
people used small piece of metal (a coin) as intermediate media in trading, instead
of deliver goods directly. By this age, some simplest models of bank were occurred
as valued goods keeper. At that time, the ancient people knew to use bird or horse
to transfer information. We cannot see the relationship between the communication
and trading anymore.
After that, at the end of Middle age, European started using trade bills in
exchange; it meant the buyer promised to make payment at some specific future
date. Because, the buyer was the reputable person or the bills were guaranteed by
an issuer, so the seller can change those bills into money at some merchant banker.
It was the first kind of credit, a new term of payment. But this kind of money was not
prevalent much and was just accepted in closed area. In some local areas, people
also used tally, made by wood, in which recorded some taxes that promised to pay
in future.
In 16th and 17th century, banking had some important innovations, for
example accepted deposits, lending, money changing fund transfer,.. In this time,
world trading had began to explode along with growth of colonialism; the merchants
and traders required a wider network of payment that support their business. To the
end of 18th century, the Industrial Revolution boomed. From that time, the world had
been developing rapidly in every aspect. The world population increased from 1
billion to 2 billion within over 100 years. This booming lead the reaction of human
about finding the different way to make food, business, .. and trading transaction.
Along with the explosion of information technology and telecommunication, the
payment stepped forward into new generation, that converges almost ending
technology.
Whats next?
As mentioned above, integration between credit card and mobile is a new
trend of business developer. According to In-Stat (www.in-stat.com), the global
mobile payment volume will reach 45 billion US dollar in 2015. This is a huge market
to push business developer to find the new channel of trading; it is credit mobile
instead of current credit plastic card. One of the most interesting technologies is
NFC: Near Field Communication. NFC is not a new technology. It was developed
from RFID (Radio Frequency Identification) but allow to two-way communication
between end points. In payment card industry, it is also called contactless card
which allow one-way communication only. Nowadays, NFC is a set of standard for
smart-phone to establish radio communication with each other in a distance of few
centimeters.
In some recent year ago, NFC occurred in payment card. A new type of
plastic card includes a smart chip which could be programmed. This card has CPU,
ROM and RAM, using NFC as communication method and can be use for
multipurpose appliances. It is predict that, in near future, this card and the mobile
could be integrated together to become a very powerful personal device.
The architecture of NFC integrated mobile
The picture above is one of the examples to illustrate how NFC can be
integrated with mobile to become payment mobile device. With the strength of
mobile capacities such as CPU, camera included, Wi-fi and 3G communication or
Wimax in future; an NFC-Mobile will become an indispensable device. The
appliance of this technology could be applied in the following:
Transportation:
People can use mobile to buy bus or train ticket electronically and
automatically when get on the vehicle by putting the mobile near the POS devices. It
can be used to pay road fee when people travelling on the road or pay the taxi fee
as well. Moreover, the mobile can be also an electronic airline ticket. Not only using
in payment, NFC mobile could be used for check in and boarding card.
Retailer:
Obviously, with NFC mobile, people in future just needs to bring the mobile
only, no cash, no wallet and no Visa or Master card when go shopping. With some
other features of mobile, the buyer can easily and quickly accesses all information of
the goods, such as the material, the manufacturer or even the vote of other buyer
who bought and used it already.
Media and Ads:
The poster of an advertisement will be more active because the audience can
use NFC mobile to access the detail information of the advertising product. If it is the
movies, the audience can watch the trailer and book the seat in cinema or pay that
ticket.
Kiosk POS:
There is no more coin in future. All kiosks in the world will installed NFC
reader so the buyer can buy everything that kiosk sell by the mobile only.
Those are some pictures of future mobile payment with NFC. Beside the
convenience of NFC, the most important that make NFC become the future
technology is about eco-system. NFC is non-battery equipment. This is the reason
why business developer invests on this technology.
Security
First of all, security is the most important prerequisite for any type of monetary
exchange. When applied to transactions over mobile networks security issues
regarding device limitations and network immaturity have also to be addressed. With
numerous developing mobile payments consortia, issues of standardization and
interoperability also have to be addressed. The battle for establishment of
proprietary standards which led to a lack of secure and interoperable standards as
well as incompatible operating systems and devices was a major reason for the
failure of the first wave of mobile payments [Mobile Payment Forum, 2002]. M-
payment need stronger security mechanisms because of the large amount of money
involved and the greater possibility of fraud. For m-payment, this is not as important
as concerns regarding simplicity and speed. Ideally, the all mobile transactions
should be secured with enforceable digital signature, for which technology is already
available.
As general rule, the more technology applied, the more risk will come. From
2.5G network, the mobile became the IP device, it means, when the mobile
connected to the digital world, the new risks are emerging.
Regulatory
Although m-payments may allow parties to make economic exchanges, it is
not legal tender in the sense it lacks the status of other payment instruments such
as cash, which is a medium of exchange that is authorized, adopted and guaranteed
by the government. At best m-payments will have to be backed by the issuers
promise to pay. To overcome this problem legislation has to be put in place that will
make m-payments legal tender. The regulations for players in the financial industry
are different from those governing the telecommunications industry, which means
that each industry has its own particular standards body to comply with.
Suitability
Besides the transaction security, trading partners are also concerned about
transaction convenience. Convenience is becoming an increasingly important issue
in modern society. In fact, Every day, people are adopting new technologies that
trade a small amount of their privacy for greater convenience. A major function of
Internet business is to provide convenience in information gathering and order
processing. Shopping convenience plays an important role in the success of
Internet commerce. And m-payment is more suitable and convenience than all the
other payment method. Payment methods have various levels of convenience. For
example, m-payment is more convenient for for the buyer than a money order or a
cashiers check or credit card. A credit card can be electronically processed, but
money orders and cashiers checks first must be obtained from an issuer and then
mailed.
Over all, the biggest challenges facing mobile payments isnt going to be
evolving technology or security, but changing the way people think about paying for
purchases and services.
Conclusion
The next generation of mobile payment in particular and mobile phone in
general is about convergence. The new mobile will be a mobile computer. Along
with fast grow technology trends like Cloud computing, Social network, the
Telecommunication (3G, Wifi, Wimax,..) and NFC, the mobile can be come a
powerful personal device and indispensable equipment of the human. Mobile in
future can be everything: the car key, house key, passport, ID card and of course,
the payment device. There are many things should be studied more about the
security but it is believe that, it will be a successful technique in future.
References:
http://www.wikipedia.com
http://epaymentnews.blogspot.com/2011/04/annual-mobile-payment-transactions-
to.html#axzz1fSlVeemw
KPMG - Mobile Payment in Asia Pacific 2011