VISA PILOTS IPHONE-BASED PAYMENT SYSTEM

Visa Europe has teamed with Canadian company Wireless Dynamics to develop an iPhone-based contactless payment system for consumers across Europe.

Visa claims that it has sponsored consumer research in Italy, Poland, Turkey and the United Kingdom that supports demand for mobile contactless payments, with 41 percent of those polled saying they definitely or probably would use a payment system from the credit-card provider. iPhone users seem even more keen, with 57 percent responding similarly, according to Visa.

With that in mind, Visa will leverage an iPhone accessory called the iCarte. The accessory can be attached to the devices to make payments when used together with a Visa Mobile application for iCarte App available in Apple’s iPhone App Store.

The iCarte accessory uses Near Field Communication (NFC) technology and embedded security that stores a person’s Visa card. Once coupled with the iCarte mobile application, people can make payments by touching the iPhone on any compatible point-of-sale terminal across Europe. Users don’t need to enter a PIN to use the service.

iCarte is compatible with iPhone 4, iPhone 3G S and iPhone 3G on iOS 3.1 or higher, and people can use multiple Visa accounts with it.

The first deployment of the service is in Turkey in collaboration with Yapi Kredi bank and Turkey’s largest mobile operator, Turkcell.

Mobile payments are being touted as the next wave in how people make purchases, and there are a variety of ways providers are using to payment-enable devices.

Visa’s approach is similar to an SIM-enabled one, which also uses NFC and stores information on a device’s SIM card for use with POS machines. People also can use their phones to send a payment request via text message and have the money taken out of their phone bill or an online payment system.

While the idea and technology for a mobile payment service has been around for about 10 years, 2011 is the year it’s expected to catch on in a big way, especially across Europe and Asia.
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Comparison of ecommerce payment systems

Ecommerce Payment Systems

Millions of consumers use the Internet for banking, shopping and so forth on an everyday basis and are reliant for their security on ecommerce payment systems. An e-commerce payment system is a secure online payment system, operated by a High Street bank or a specialist company and often, although not always, integrated into the checkout process of a site. The aim of an ecommerce payment system is to provide transactions that are not only secure – in real and perceived, terms – but fast and at minimal cost to the consumer. There are several different methods of achieving this aim and costs vary, so it is worthwhile to examine some of the options available.
Bank and Credit Card Systems

Many large online businesses use the payment systems offered by major credit card operators, such as Visa and MasterCard. Cardholders create and register a password with their bank and use that password to authenticate each online transaction that they perform. If you have a merchant account with a bank, it may also be possible to collect credit card details online, but to process transactions manually – as "customer not present" – depending on the terms and conditions of your agreement.
PROTX (now Sage Pay)

Another alternative is to integrate your online checkout process with an e-commerce payment system provided by a bank, for which you will be required to pay a monthly fee, plus a percentage of each transaction. Protx which has just been rebranded as Sage Pay) for example, provides a payment gateway which integrates with bank systems for a fixed monthly charge, provided that you have a merchant account with one of its bank partners. Sage Pay "Go" costs £20 for up to 1000 transactions per quarter and from 10p per transaction if you regularly processing over 1000 transactions per month.
SecureTrading

If you want to accept online payments directly through your own website, you will need what is known as an Internet merchant account. This can be handled indirectly, through a service such as the SecureTrading Merchant Account Service. This can also arrange merchant accounts for mail order or telephone ordering if need be – or directly at a bank. Charges for merchant accounts vary from bank to bank, and according to the type and age of your business, together with other trading factors such as turnover.
PayPal

If you feel that you do not need, or do not want a merchant account with a bank, PayPal may provide a simpler option. You can create a PayPal account very quickly, and there are no set up or cancellation fees. Importantly, you are not bound by a minimum number or value of transactions each month. You can simply cut and paste the HTML code supplied by PayPal for the creation of a payment button into your online checkout for single item transactions. Alternatively you can choose one of the many shopping carts already integrated with PayPal for multiple items. Transaction fees range from 1.4% to 3.4%.
Google Checkout

Other ecommerce systems that you wish to consider include Google Checkout, which allows online shoppers to make purchases from anywhere on the Internet, but provides tracking and delivery information in a single location. Merchant fees range from 1.4% + £0.20 through to 3.4% + £0.20 per transaction depending on sales volumes, with additional costs for international transactions.
WorldPay

WorldPay is backed by the Royal Bank of Scotland, the fifth biggest bank in the world. It – which allows secure payment not only by credit, or debit, card, but by what the firm claims is the widest range of payment means currently available.

All of the major ecommerce payment systems providers are rated by the PCI Security Standards Council which is a global forum concerned with security standards for account data protection. The Council has a stringent set of Data Security Standards (PCI DSS) to which payment providers are encouraged to adhere.
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JPMorgan Adds Mobile Banking Apps

NEW YORK – JPMorgan Chase & Co. wants to make it easier for people to pay using their mobile phone, American Banker reports. The banker added two new features to its application for the iPhone that allow users to deposit checks and conduct person-to-person payments.

JPMorgan Chase hopes that people who use their phones to deposit checks also would want to use the devices to transfer funds from person-to-person. “The more people start using their phone and seeing their phone as a payment…or a banking device, you’re going to get adoption of a broader array of services,” said Jack Stephenson, director of mobile, e-commerce and payments for JPMorgan Chase.

Early results indicate both payment services have “very high adoption” rates, but Stephenson said it would take time to figure out if the uses would overlap. “Our strategy is around convenience,” he said. “You want to allow customers to do business in the channel of their choice.”

JPMorgan Chase developed the apps for the iPhone and iPad initially because of the higher user rates those devices have. The company has plans to enlarge its mobile services to other phones and devices, although Stephenson declined to name which ones or how soon those apps would be launched.

Other banks are testing similar applications, such as Citigroup Inc. and Fiserv Inc., which both discovered users desired mobile payment options to be bundled with other services. “Any time you can get a user to make a mobile transaction, you’re going down the right road,” said Erich Litch, a senior vice president and general manager for consumer services at Fiserv.

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Mobile Commerce: Still Evolving

Mobile commerce is at our fingertips, metaphorically and figuratively. Technologists impatiently clamor for mCommerce to become a reality, while some insist that we’re already there.

Maybe we are, at least within our small mobile ecosystem — but I believe we still have a lot of work to do before making mCommerce a broad reality.

Recent movement in the market seems to suggest that we’re getting closer. In the past month, PayPal introduced launch PayPal for mobile on the iPhone, touting itself as “the wallet in the cloud, and Visa made a $2 billion investment in mobile commerce through the purchase of CyberSource.

While mega-brands and major innovators continue to move forward and work on mCommerce applications of substance, the vast majority of companies in the middle are still trying to figure out how to catch the mobile wave.

Mobile commerce remains “the next big thing” for us mobile marketers. An obvious statement for anyone who has an iPhone and has purchased music or an app, or has read a book on Kindle. Consumers are growing increasingly comfortable with purchasing digital goods such as ringtones, music, apps, etc., through their mobile devices, with immediate gratification.

Apple has proven to be a pioneer in the space with the iPhone and its appstore. The iPhone has made mobile purchasing of applications and music second nature to most device owners, but unfortunately, the “good” being purchased is still only usable through the iPhone itself.

The continued acceptance of m-Commerce over these devices lays the groundwork toward where we need to move the industry as digital marketers. Too often, we view the devices simply as another channel to push advertising to consumers.

The reality is that mobile phones are still utilitarian devices that are designed to do a handful of things very well, but they were not, and should not, be designed to merely stream advertising to consumers.

As consumers continuing to become savvier in their ability to avoid advertising, the push approach to mobile advertising will continue to abate in prominence. Consumers are inundated with advertising regardless of their choice of device for receiving information. They continue to figure out new ways to tune out and work around advertisements on TV and online, and it’s only a matter of time before they turn out irrelevant adds delivered over a mobile device.

Combined with a growing understanding of one’s digital identity and privacy concerns (thank you Facebook), consumers will continually become more in tune with their ability to opt-out of marketing messages. In fact, this could lead to a shakedown in our industry similar to the one telemarketers faced with the “Do Not Call” list bask in 2004.

As marketers, we need to be ahead of the curve and make sure we’re giving consumers offers and content they want — or we’ll end up on the outside looking in, trying to figure out new ways to keep people from avoiding our messages.

And for a consumer who is ready to buy, the mobile device remains one of the most convenient methods for making a purchase. Marketers should focus not on standard advertisements, but on uses/applications that ultimately transform the m-commerce experience and make it easier and more convenient for all users to capitalize on this technology to purchase products and services.

So, what do we need to do to make mobile commerce part of the mainstream? Significant advances in three main areas still need to be addressed before we can truly move forward:

Usability. There is still a long way to go to ensure that purchasing on a mobile device is as easy as possible. It can’t be more than a handful of clicks, and that includes entering payment (or even better — not entering payment information but initiating automatic billing by just entering a simple mobile purchase password) and shipping information (no need).

Companies like Amazon and eBay have done a good job with iPhone applications that enable users to easily access their account settings but the next step is making this capability as easy as possible via the mobile Web or even SMS.

Payments. This is the area that will ultimately help the predictions of a mobile future come true. There are new technologies that are making this much easier, and PayPal continues to innovate in the space. But we’re not at the point where a mobile user can walk up to a kiosk and pay with their cell phone—yet.

This is where carriers and brand like Visa have the opportunity to innovate. Visa took the first step with the acquisition of CyberSource, but for the promise of m-Commerce to be realized, Carriers need to come up with new ways to develop a credit product for mobile users.

Tying a credit account to individual IMEI numbers for single click purchases would help overcome the purchasing barriers we face today. Maybe this is the direction Visa is going, knowing that security will be the priority concern.

Proximity. Current “proximity” based m-Commerce focuses mostly on items such as electronic ticket delivery (so the ticket can be scanned form a phone). Mobile ticketing has existing in various forms for several years now, enabling consumers to purchase tickets to sporting events, movies, concerts, etc…, and have the tickets scanned from their mobile device.

While this type of thinking and innovation is where m-Commerce currently resides, creating convenience and delivering these goods in new ways, proximity continues to be a huge missed opportunity.

Location-based services such as Foursquare have given us a clue as to where proximity based commerce can go. Let’s say you’re at an event, watching a NASCAR race, a ball game, or at a concert. You want to purchase something, but you don’t want to miss the action, wait in line, or carry your stuff with you for the rest of the evening.

Proximity-based mobile commerce means that you should be able to purchase your goods by simply sending a text message in response to a creative that tie into display advertising at the event. This is already happening, at a smaller scale – mostly by allowing users to send messages via SMS to display on big screens while waiting for an event to start.

This is common at concerts and at certain event arenas like the Staples Center in LA. This is the proverbial tip of the iceberg – there’s much more than can be done here with existing technologies.

So is the m-commerce future here? Yes and no — we certainly have the ability to make a purchase through a mobile device, so maybe that’s a bad question.

Do we know what mobile purchasing will look like in three to five years? The answer to that is no – and that’s a good thing, because there’s a huge opportunity for brands, creative agencies, technology providers, payment platforms and carriers to build a better mobile future.
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Putting a bank in your mobile phone

Mobiquity, a mobile phone application, promises to bring an array of financial services to users' fingertips.

Developed by mobile services provider Comviva Technologies Ltd, the product integrates a telecom operator's network with various payment models. It has three key features--mobile banking (mBanking), mobile payment (mPayment) and mobile money (mMoney).

MBanking allows subscribers to access bank accounts, make payments and request cheque books, among other things. Through mPayment, subscribers can access the Vodafone M-shop to buy airline and movie tickets, send bouquets and gifts and so on.

MMoney can allow subscribers to transfer money into a "mobile account" and use the money to make payments wherever they go. But due to the constraints of India's regulatory framework, no telecom operator has agreed to offer this Mobiquity service.

"The whole idea behind introducing Mobiquity is to make the mobile phone a convenient, cash-free and card-free payment and transaction medium able to deliver a range of transfer, remittance and payment applications," said Manoranjan Mohapatra, chief executive of Comviva.

The company has introduced the mMoney service in parts of South Asia and Africa. It is hopeful that regulatory change will soon allow it to happen in India as well, and is in talks with operators.

"We expect that within six-nine months, most operators will launch their services in India in accordance with the guidelines." said Mohapatra.

India has nearly 618 million mobile phone subscribers. But some 395 million adults--or just over half the country's adult population--do not use any formal or semi-formal financial service, according to a recent study by the consultancy McKinsey and Co. Mohapatra expects Mobiquity, which is is easy to use, even for the uneducated, to change this.

"The features with regard to security and the flexibility in the system, which allow different regulators and operators to work with ease, will surely help in the adoption of the product in the long run," he said.

Mobiquity won the Mobile Messaging Congress Award 2010 in mobile financial services category in London. It also won Golden Peacock awards for innovation--for mBanking in 2007 and for another feature called hub solutions in 2009.
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Money matters in Eve Online game

Of all the economists in Iceland Dr Eyjolfur Gudmundsson has the most unlikely vantage point from which to observe the tribulations of the financial markets: deep space.

Dr Gudmundsson is the lead economist for CCPgames, the company responsible for Eve Online a sci-fi themed Massively Multiplayer Online Role Playing Game with more than 300,000 players.

It is similar in concept to the BBC micro classic Elite and puts trading of commodities and manufactured goods at the centre of the game.

From CCP's headquarters in Reykjavik, Dr Gudmundsson monitors Eve's in-game economy, watching the price of raw materials or the latest type of ship with the same rigour that other economists watch the price of copper or coffee.

He told the BBC that on the "markets of Eve there are about 1.2 to 1.4 million transactions each day".

There's even the Quarterly Economic Newsletter which records and analyses Eve's economy in the kind of detail more usually associated with a prospectus for an investment fund.

Economic aid

For Dr Gudmundsson, who enjoyed a successful career as an academic economist, watching the economy of Eve Online presents a unique opportunity.

"I said to myself I must do this. No economist has ever before been able to have such minuscule information about transactions, about the participants of that economy. I don't regret that. It's been one hell of a ride."

The virtual universe with its hundreds of thousands of players is an economic petri-dish in which the operation of markets can be observed with a clarity impossible in the real world.
Geyser in Iceland, BBC
Iceland's economy suffered in the global downturn

And having an in-game economist is useful for CCPgames as well.

"We assist the developers in evaluating changes to the game, as well as assisting customer support finding people who are not playing according to the rules", said Dr Gudmundsson.

When players discover exploits in the game allowing them to "cheat", it shows up in the price of in-game items. For example, a fall in the price of a product, may indicate that someone has found an exploit which allows them to produce it very cheaply.

"We go and research price changes, and sometimes they have shown us that players found an exploit and hence we have been able to plug the game," he said.

Dr Gudmundsson is, in effect, an early warning system for CCP.

Similarly the actions of bots and players interested in making real money out of trading Eve's virtual currency and goods can be analysed in economic terms.

By diagnosing issues like this, and offering solutions, he is able to use his economic skills to help maintain the integrity of game play.

However, unlike many real world economists, Dr Gudmundsson isn't concerned with ensuring the prosperity of players. Economic ups and downs, booms and busts, even skulduggery that would normally result in the attentions of the financial authorities are all perfectly acceptable.

Eve is a universe in which piracy is a viable way of making a living. Learning to deal with cut-throat business practices is part of the fun of the game.

Unfortunately the same can't be said of financial crises in the real world.

Iceland has been deeply affected by the troubles of the banking industry. In a small country, the affects have been impossible to for Dr Gudmundsson to ignore.

"It's been difficult times for Icelanders, to watch the unfolding saga."

Piracy please

Last December the number of people playing Eve exceeded 317,000 - the current population of Iceland.
Screenshot from Eve Online, Namco Bandai
Eve revolves around exploration and space combat

In Dr Gudmundsson's personal view, it's possible to discern lessons in how future global crises may be avoided, from the economic behaviour of the Eve population. His main belief is that greater transparency would help individuals make better economic decisions.

"We should trust people in making their own decisions. People do make the good choices when they have the right information. More transparency is definitely something we need in the real life."

Dr Gudmundsson illustrates his point by looking at how player-run banks work in Eve.

There have been some notable swindles with billions of ISK (Eve's game currency) going missing. Because Eve has no "lender of last resort" players are consequently very careful about who they trust with their in-game money and very wary of those who aren't open about their business.

He believes it's been a lack of information has been a problem in the current crisis.

Savers should have the information they need to be able to make their own decisions about who to trust with their money, instead of relying solely on regulators who may not be able to keep up with changes to the banking sector, he says.

But the harsh realities of space commerce have not lead Dr Gudmundsson to embrace Eve style laissez-faire economics in the real world.

"It has sharpened my view on neoclassical economics, at the same time I do see the faults of that system. Personally I am very fond of the Scandinavian model, a good combination of healthy competition whereas the government helps those in need."
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Money sharing comes to Facebook

Friends on social networking site Facebook can now send small payments directly to each other via an application called Buxter.

Buxter handles transactions in Euros or US dollars, with plans to launch in Sterling in the next four weeks.

Other currencies are subject to a 5% conversion fee at the point of upload to a Buxter account.

The company behind the application is ClickandBuy which operates an online payment service across the web.

More than 13 million people across the world already have accounts with it, and a ClickandBuy account is required in order to use Buxter.

Transactions between Buxter accounts are free to make and receive but a 1.9% commission fee, minimum 2 euros or $3 (£2), is charged to move the money to another source such as a bank account.

"People share their statuses, their information and their pictures on Facebook so the question is why not share money there too?" Christian von Hammel-Bonten, senior vice president at ClickandBuy told BBC News.

The application is designed for fairly small payments (a maximum of 50 euros (£45) can be held in any one account) and transactions can only be made among people who are friends on Facebook.

Mr von Hammel-Bonten said he hoped people would use the service to pay each other for shared expenses such as cinema tickets and restaurant bills initially.

"We're not trying to compete with national banking systems. This is not somewhere to pay your gas or rent," he said.

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buxter.com