A Global Mobile Payments Standard: Is It Achievable?

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By Raomal Perera, CEO Valsita

E-mail has become so much a part of everyday life that it’s hard to imagine a time when it was a new technology with an uncertain future. Yet this was the case as recently as the early 1990s, when the email market was deeply fragmented by a number of incompatible standards.

It has taken a huge amount of work to achieve today’s fully interoperable, global system. Email is ubiquitous because the proprietary systems are largely gone – vendors have either adopted the standard or died.

The same will be true for m-commerce, which is following a similar development path. Easy, secure mobile payments are a pre-requisite for the success of mobile commerce. The lack of a common payment mechanism is creating a stumbling block.

The reality is that until common interfaces are defined, based on current standards users will not properly engage in m-commerce. Only then will consumers see the benefits of using their mobile phone as an ‘electronic wallet’ that allows them to conduct transactions more conveniently than more traditional channels.

This means they must be able to use any application without having to install new software each time they make a purchase. If mobile transaction processes remain complex, then why should consumers change from the purchasing channels that have served them well for so long?

A global standard will also encourage the development of innovative content and services that consumers will want to pay to receive and use. It will allow users to choose services from any operator, rather than remaining tied to a single operator’s offering. This will enable roaming payments, encourage healthy competition and improving the user’s experience. It will make it easy for financial institutions and merchants to become involved, increasing the user’s options and simplifying the transaction process.

If a global payment standard is so critical to a market with such promise, why haven’t they been achieved? The answer is simple: the industry is still very young. Until recently, it has been characterised by tension between the big players such as wireless operators, credit card companies and financial institutions. There has been no consensus on technology standards, which has led to fragmentation. It is only in the past few years that we have seen a more collaborative approach start to develop, with the emergence of four major industry collectives working to overcome the challenges facing m-commerce.

Most recently, Simpay was founded in 2003 by Orange, Telefonica Moviles, T-Mobile and Vodafone to drive m-commerce through the development of an open and interoperable mobile payment solution. Looking initially at micro-payments, Simpay’s aim is to work as an alternative to cash as well as enabling consumers to buy higher price items such as flights and cinema tickets and billing them to a credit or debit card (macro-payments). We believe that this is an important move for the industry and we are working closely with Simpay to develop a Simpay-compatible version of our payments technology.

Other standards initiatives include Mobile Payment Forum which acts as a bridge between mobile and payment institutions. PayCircle, established by HP, Lucent, Oracle, Siemens and Sun Microsystems, develops payment APIs to accelerate the use of mobile payment technology. The Liberty Alliance Project was formed with a similar objective, to deliver and support a federated identity solution.

This is a real indication of the extent to which the industry has started to collaborate on these issues. The m-commerce industry must develop a global payment standard in order to produce the quality services that will allow it to gain real market traction.

The challenges we face in achieving this goal are the same as those overcome by any successful technology as it develops. For years email was restricted to academia, the US military and serious computer enthusiasts. I am confident that the<