Very interesting article you wrote there. I’m not a dedicated specialist to this field but I’m indeed watching this trend next to the integration of RFID tech into Mobile Phones.

I could maybe suggest a few reasons that are potential reasons that mobile ticketing is not taking off :

1. Security & Authentication issues

Despite any technical argumentation you might oppose : the cellphone will take a very long way to be considered as a secure device. It has not been it so far : you’ve got viruses, bugs, system hangs, all things that are not even a question with a simple credit card.

2. Global adoption

This technology shows of course many advantages, but to be efficient, demand & offer have both to agree to switch to this new mode of payment. I’m not sure that Cellphone manufacturers are ready on one side to provide massively such devices, and on the other side the retailers, online services etc. being also equipped to accept such new payment processes.
This will require new standards – wolrdwide – a things that could take years to get fixed, depending on the market’s pressure.

3. Social issues

A cell phone is a fashion device in many cases. Some people have more than one, some use different phones everyday etc. Phones are fragile, get lost, broken, worn out etc.
In a life where your phone becomes a credit card, you better keep an eye on it. This potential revolution will promise some sleepless nights to people that have simply forgotten their cellular in the car, but are thinking they’ve lost it.
From the social point of view, I’m not sure that this is going an overnight revolution. It’s a question of trust in the device opposed to the fear of being potentially exposed or hackable. And when it gets to the customers money, no approximatives are allowed.
In France, Banks are trying for nearly 10 years to introduce ‘Moneo’, an alternative method of payment, linked to the credit card that allows almost instant proximity payment without using a code (max 30€ payment, just sliding the card, ideal for buying bread, cigarettes etc.). It doesn’t work at all, despite it’s totally free and you don’t even need to use a different payment method.
Never underestimated the user’s resistance to innovation especially when it goes down into his wallet.

I don’t want to comment this too much – jsut a few ideas – as this is a very large and productive topic, but I would suppose that you’re a bit ahead of current times. I believe myself that the cell phone revolution is not finished yet and that the ‘device’ in itself has not achieved what it will finally do in our everyday’s life. Mail & Entertainement have joined digital cameras & phone to end up in devices we wouldn’t dream of 5 years ago (look at the iPhone).
The next step would probably be embedded RFID chips allowing first to collect information on a proximity basis (ads displayed in the street, tourist’s informations, whatever), then allow minor payments on limited amounts. With the adoption growing, the limits would then be pushed back and finally come to a point where a perfectely secured (vocal or biometric authentication), stable collection of devices would then allow secure transactions. This on an internationally shared standard to ensure maximum security. It’s probably the main obstacle right now and such new types of services will need to be standardized. Something for the GSMA & some others to ponder over.

But it will come soon enough, I’m definitely conviced of that

Antoine FERRAZ

Visa & MasterCard WILL play and will try to dominate this space. The banks love the idea of being able to provision the phone with credit card and debit card functionality if it can be done securely. The cost savings over manufacturing and mailing credit cards is huge.

The problem is that Visa and MasterCard have not figured out a way to do micro-payments profitably without cannabilizing their more profitable credit card and signature-based debit card business based on Interchange. This leaves the door open to one of the other models in the micro-payment space; thus, my conclusion that their will likely be more than one model in play. I am not smart enough to figure out which of the other three models will be the second player.

In India credit card is not a big success, because peoples mentality about using thr own money, majority of the people uses debit card as better payment option compared to credit card. still majority of the transaction happen thru cash and debit card only.

In longer term, probvably 5+ years you may see mobile payment frequently.

For cash withdrawal
ATM should identify the customer mobile
Cusomer should enter his Password or authorisation from his mobile
Cash will be dispensed

For Money transfer
Third party software should be loaded in mobile for better transaction.

All the security concern should be addressed in this model with Bank , customer and vendor.

your colloboration Model will work in this, but more fine tuning in the security featurs are required.

Lets see what will be the future model.

Remote payments? The words e-bay and fraud come to mind.

Peer to peer payments is closer to mobile banking than mobile payments except that the recipient doesn’t always have to have a bank account. Remittance fees are now extremely competitive. In Dubai, large banks charge 75 to 80 dirham fee. A supermarket with remittance services to India and the Philippines charges just 15 dirham. Western Union charged the same rates with a nominal tax charged although I’m not sure who followed who. It goes to show that there is very little money to share should telcos team up with remittance firms although I wouldn’t be surprised if less favourable exchange rates were offered to compensate for additional costs.

And finally, you can’t link mobile payments with money laundering. Money laundering is seeing a guy carrying two suitcases full of cash and offering to buy a number of condominium units with no questions asked. Now try buying even a single condominium unit with mobile payments. But seriously, a parallel economy exists for a reason or people can no longer buy a single stick of cigarette or a cup of cooking oil from neighbourhood shops.

The business ecosystem where DoCoMo and Safaricom were able to impinge directly on banking activities is more difficult to achieve elsewhere, and that’s contributed to holding up development of these services. Whether the cultural factors behind Japanese or Kenyan adoption of the technology will transfer is harder to assess but as far as I can see there’s no reason why not.

The backlash by the banks in Kenya also shows how difficult it may be for network operators in developed countries to develop mobile payment services without support from banks. Unfortunately the more players there are involved the business the more difficult it is to construct business models that work.

Possibly the most interesting area is whether m-payment services can by-pass the existing payment networks. Putting a payment app in an NFC phone and then transacting through the existing networks is trivial, once you sort out the business models (which is definitely not trivial). However, if you were to figure out how transact through the mobile network instead you might find that the number of intermediaries taking their cut is vastly reduced and the business models vastly simplified.

Anyway, personally I don’t think you’ll have huge consumer adoption problems but the business models are difficult anywhere you don’t have a single entity like DoCoMo controlling nearly everything.

(a) perception of lesser security (rather transaction reliability – i.e., whether a transaction has really happened, especially when the network connection is erratic, etc.),
(b) availability on all major mobile platforms
(c) the real benefit to consumers
(d) who is the real consumer for this and
(e) shopping habits.

Unless there is a well-designed robust app that offers clear update on transaction status, especially clear transaction rollbacks when it fails, I don’t think anyone is going to use it seriously.

Secondly, what happens when you lose a mobile ? Most people anyway store their passwords on their mobiles, and they might not want to add an app that uses one such password !

You talk of lower cost of transactions. Unless those cost savings are being passed-on to the consumers, why should they care about lowered costs, especially when they still are not sure of any improved security ?
We should also rememeber that slightly high-end phones might be required for such apps and those who can afford high-end phones will likely anyway have a couple of credit / debit cards for increased convenience. Those who don’t have credit / debit cards might also, not necessarily but generally speaking, not have such high-end handsets that support a secure app for mobile payment (not sure if you also need a GPRS handset and connection for this ? if yes, you are already making it unavailable to masses). Of course, there will always be tech-enthusiasts who will try the stuff, but as a sustainable consumer base, I see challenges.

Finally, at least in India, we still like to ‘touch and feel’ a product before buying. Buying over the net itself is not mainstream. I read recently that buyers generally make up the mind to ‘own’ that thing after keeping in the hand for about 30s. That kind of creates the ‘bond’ between the shopper and the item being shopped. Internet has denied this experience to shoppers to a large degree, but is still able to show photos, user reviews, etc. With mobile shopping, even that much is not possible. So, I clearly see this as something that goes against the fun-and-feeling of shopping. This technology will have to also be a habit-breaker to succeed.

Your address, bank details and mobile number can all be linked to your Paypal account. If you see, for example, a poster of a product that you want, there would be an item code and a shortcode text number on the poster. By texting the item code to the shortcode, Paypal would automatically debit your bank account and then the vendor would arrange for shipping to the address logged on your Paypal account. All by sending a 5 second text……

Does anyone know if this has been trialled anywhere because I think it has great potential…..?

I consider myself fairly tech savvy, but making payments through my cell is a different ball game altogether. If you ask me, I would rather prefer logging on to my network provider’s website and pay my bills looking at numbers and text in full-color or connect with my bank and have it taken care of.
1) I NEED to see who I have made calls to and when, just in case the provider decides to add in a few “extra/hidden” charges to my INR 5K tab every month.
2) It is not about security, not about convenience, and definitely not about educating the masses. People are smart, and they learn what they have/need to learn Security, convenience and such like are simply a matter of finding a few academics to help you figure that out.
3) I can with all certainty say that-the idea in itself is very neat, and the fact that you will make money regardless of initial capital invested. Considering the market share ‘Nokia’ has in the mobile phone segment, it would not hurt to notice that expectations towards such a project will be high as well :(
4) A lot of posts here mention techniques to work around this “problem”. Certainly nothing wrong about that, though sadly, I would say there are over 2B+ people on the same boat as me

Hope that helps!

Best,
-Rohan