M - Commerce
Systems and Issues
- Wireless payment by handheld
devices like Palm - beam Palm to a credit card terminal
using infra red now and Bluetooth in future. The Point Of
sale credit card terminal has an infra red device attached
- Cashless payment without
using conventional credit cards
- Mobile wallet initiatives
The Requirement ...
To provide a comprehensive infrastructure (consumer software and
hardware enhancement, if required for handheld device, software
in retailer's server for processing a wireless transaction, backend
payment and account reconciliation application infrastructure at a
centralized processing center - akin to credit card processing by
Visa or Master Card, the security mechanism, etc) so that an
end-to-end transaction can take place between a consumer and card or
wallet holding organization.
This term defines payment for small value transactions by using
new m-commerce systems. Paying by credit cards is not economical
because of high processing costs for such transactions.
- Mount Sinai hospital allows employees to
charge their purchases by using their ID cards that have a micro
chip embedded into these cards.
- Boeing, DaimlerChrysler and Walt
Disney allow their employees to do the same.
Factors & Issues in Web-based Mobile
- Lack of standards for m-commerce between
different financial institutions
- End-to-end security issue
- Retailer-processing center integration
problems - too many variables in OSes.
- High transaction processing capacity at the
backend application processors - see Visa's initiative to
use Sun Solaris that is claimed to handle 10,000 transactions
- Lack of payment infrastructure
Smart Card and M-Commerce Payment Systems
In Europe, smart card is being integrated into
payment systems. Go here about a press release on Oberthur's
pilot with smart card as a vehicle for m-commerce payment.
Major Vendors Initiatives
- Palm and Visa Partnership - Palm
Inc. has started an initiative with Visa to allow
consumers to use Palm devices to beam credit card information to
POS terminals through an Infra Red (IR) connection. While
this is an early stage trial and pilot, it is significant to see
two major players involved in getting users to modify their
individual payment methods.
- Visa International has rolled out a
high-transaction payment infrastructure (consisting of Cisco
networking gear and Sun Solaris J2EE processors) for online
transactions. This is expected to be enhanced to allow mobile
commerce. For more info, see Information week story. Visa and
Master are feeling the heat from micropayment vendors. www.informationweek.com/796/payments
- City Group made a deal with AOL-
this will allow AOL subscribers to transfer funds and make payments
for web purchases
is an online payment processor - charges 15
cents/transaction , plus set up fee of $99 for existing and $499
for new customers (mid 2000 pricing)
Mobile Wallet is related but not exactly a payment
system. It facilitates payment for buying online multiple
items from different merchants. "Please note that SNAZ
declared bankruptcy in August 2001. Hopefully, some other vendor
will pick up the intellectual property developed by SNAZ."
- MobileInfo Editor
- Person to person payment systems - see www.propay.com
- This allows any two people exchange money anywhere and at
anytime. Since this is a paradigm shift to replace hard
cash with electronic cash without the Federal Banking system of
each country or a credit card institution like Visa or master
card, it may find consumer resistance.
- For three months, Macdonald
Hamburger chain has been testing a new wireless payment
technology in nine restaurants in Chicago and four in
California. Working with Exxon Mobil, McDonald’s is enabling
its customers to use their Mobil Speedpass transponders to swipe
pass special cash registers to pay for their meals. For
more, go here.
- VeriSign has agreed to
supply new trust engines to be embedded in wireless
communication devices of DoCoMo’s i-mode 3G services. For
more, go to the news page.
- FreedomPay.Com (a micro-payment vendor) is
working with Nokia to allow consumers to buy stuff from vending
machines by using their cellular phones. Nokia is planning to
embed RF devices in smart phones to allow this capability
FreedomPay.Com is going after the lunch crowd.
- wMode -
wireless micro-payment vendor
Vendors and Products
Business Case Justification -
Pretty good as compared to a transaction where the retail clerk
swipes the credit card.
MobileInfo Advisory and Comments: This
is a complex area of software application integration between
payment processing centers, retailers. and consumers. Wireless must
be treated as an add-on to the existing application infrastructure. In our view, stand-alone payment solutions
being floated today will not survive for long. However,
micro-payment issue is complicated because of the cost of processing for
low-dollar value transactions. It is also not clear whether the
carriers are willing to address all the requirements of
micro-payment. It is
one thing to bill consumers for per minute or per second cellular
calls by batch or electronic processing of well-defined billing records collected
from your partners or your own call handling/switching processors. It is entirely
a different and complex task to deal with hundreds
of thousands of retailers and other organizations that may generate
m-commerce transactions where product and services have entirely
different units of measure and settlement requirements. We
need to merge the expertise of established players like Visa/Master
Card and new breed of more efficient micro-payment software vendors.