News
Issue #2002 - 11 (March 2002)
(Updated Mar. 20, 2002)

M-COMMERCE

Vodafone and T-Mobile announce interoperable mobile Micropayment platform initiative

Wireless Village Releases First Standards Document on Instant Messaging - facilitating m-Commerce - see second item of this bulletin

Vodafone Group Plc (“Vodafone”) and T-Mobile International AG (“T-Mobile”) today announce an initiative to create an interoperable mobile payment platform to accelerate customer and merchant adoption of mobile microtransactions. The companies are planning to launch the open platform toward the end of the year, with an initial roll out in Germany and the UK.  Vodafone and T-Mobile hope that other operators will join them in launching the payment platform.

The payment scheme will deliver a secure and easy-to-use payment solution for the purchase of goods and services via a mobile device. Wireless customers simply store their personal details and preferred payment options in a virtual wallet, and then choose which payment instrument they wish to use when making payments via their mobile phone, similar to undertaking a transaction from a conventional wallet.

Multiple payment options will be available including traditional credit and debit cards, making transactions possible with any participating merchant of the scheme. It is also possible, as part of this scheme, that smaller purchases will be billed direct either to the customer’s bill, by pre-paid top-up card or using other micro payment mechanisms. The aim of the scheme is to provide an end-to-end experience that is convenient, secure, user-friendly and trustworthy.

Thomas Geitner, Chief Executive, Global Products and Services, Vodafone, said “An open, interoperable platform for mobile payments will be a significant enabler of m-commerce, enhancing the array of content, services and commerce options available to customers.  Our goal is to bring additional value to customers by turning their mobile phones into convenient wallets. We believe mobile customers should be able to use their devices as a payment tool, much as they use their credit or debit cards or cash today.”

“There is a strong need for industry synergies to drive the usage of mobile data services,” said Nikesh Arora, Executive Board Member, New Business, T-Mobile and CEO, T-Motion.  “We see a global vision to make the mobile device multifunctional, a phone “too” approach -consumers using their devices for phone calls, as a games console, a messaging terminal or a virtual wallet. We aim to offer a seamless end-to-end solution for consumers and enterprises and integrating commerce into that solution is a key milestone.”

Encorus Technologies, owned by eONE Global, is working with the operators on this initiative by combining its PaymentWorksTM software with the payments expertise of First Data Corp, the world’s largest payment processor (NYSE:  FDC) and eONE Global’s largest investor.

Vodafone micropayment system is based on technology from iPin Inc., which handles the transaction from the consumer payment to the clearing and settlement, as well as customer service aspects. 

Wireless Village Releases First Standards Document
Wireless Village, the initiative sponsored by Ericsson, Nokia, Motorola, and over 100 others, released the Wireless Village version 1.0 specifications, which will enable interoperability of mobile instant messaging and presence services.

Mobileinfo Comments & Advisory: Micropayment is a term that denotes the business processes and the software that allows carriers and intermediaries to allow payment of small amounts of charges for simple m-commerce transactions like downloads of ring tones, music, trade alerts, wireless games, information content as well as physical goods. Need for micropayment transactions is obvious when you realize the fact that traditional methods of payment based on credit cards are cumbersome and expensive for all three parties - consumers who ultimately pay for it, intermediaries who facilitate this and the suppliers who deliver the content or goods. Micropayment transactions also allow for sharing of the revenue between content providers (as unique suppliers) and the carriers - a business model that is foreign to credit card companies and banks. There also exists the concept of content aggregation from many small content providers and then settling sort of royalty to this "bit" players, so to speak. Finally, the types of services offered are non-traditional. 

We welcome Vodafone's "m-pay" bill system as an effort by a major player to address this important requirement for m-commerce (carrier style) to succeed. We understand that Vodafone has made some deals with sports sites like Arsenal Football Club to get this service going. The Football club (soccer club, to be precise) will charge something like 50 pence per match initially (bound to go down, we think) to send video clips of goals and highlights to the user's handheld device. This cost will show up as extra item on users phone bill. Eventually the club will send the clips direct to the user's phone. 

Vodafone has taken the lead that will give it a short-term advantage but other players will be there very soon. There are several software suppliers like iPin who are developing the software that carriers can buy. In fact, it is not clear who will emerge as the leader in this software. Our own guess is that most carriers will discard their first version with something that is more reliable, is based on XML and 3G network standards using reserved channels for control information. 

Our advice to the carriers - start offering micro-payment-based services on either in-house or outsourced basis depending on your own unique situation and priorities.

Note: This news release may contain forward-looking statements. Readers should take appropriate caution in developing plans utilizing these products, services and technology architectures.  All trademarks used in this summary are the property of their respective owners.