Mobile Payment Options

Remote mobile payment for both physical and digital goods is expected to grow substantially in the next several years, according to a new whitepaper from Juniper Research. A summary of this research at MarketingCharts covers a number of options for remote mobile payment:

• Direct-to-bill (D2B): Generally offered by mobile phone providers, D2B lets mobile phone users debit mobile purchases on their phone bill.

• Premium Rate SMS (PRSMS): Retailers and content providers offer digital products and services via an SMS text message which the customer pays to receive (commonly used to charge consumers for downloading digital products such as ringtones and wallpaper).

• Mobile Web/WAP Billing: Online payment for the Mobile Web enables retailers to bill goods or services from a mobile or standard Web site. Very similar to payment on standard eCommerce sites, it usually allows consumers to pay via a variety of payment mechanisms that may not be unique to mCommerce, usually credit or debit cards. Richer content such as gaming, music, and video is better paid for via the mobile web simply because of the ability to have previews before purchase, and because of the assurance of delivery.

• SMS/Java/SIM Toolkit: SMS payments, excluding those under the banner of PRSMS, are when the mobile payment is initiated using SMS and the funds are transferred from a registered account or a mobile wallet. The registered account could be debit or credit based or be based on a SVA (Stored Value Account). Scheme operators include PayPal Mobile (owned by eBay), and SmartPay in China. Java applications and SIM toolkits can also deliver this functionality.

• Person-to-person (P2P) Payment: P2P payments are when funds are transferred between mobile phone users and then the funds are redeemed for airtime, goods or cash at selected merchants. P2P is seen as a social money payment mechanism in the developed world - for instance, to allow a group of friends to share payment for dinner at a restaurant or for parents to send funds to a child at college to pay for school books etc. In the developing world P2P has considerable potential to act as a major payment method, as often there is a lack of traditional payment and banking infrastructure in these economies.

• Smartphone Apps: Mostly paid for by credit card, these applications perform a wide variety of functions and are being offered by an increasing variety of companies on smartphone platforms including Android, Blackberry, iPhone and Windows.

The security issues surrounding any of these approaches should always be a concern. And as for PA-DSS compliance, forget about it.... but see a related blog post: Banks Rolling Their Own PCI Approval for Mobile Apps

And see this related story.