Mobile Payment Systems
By Paul Budde

Mobile commerce is potentially important for a wide range of industries, including telecommunications, IT, finance, retail and the media, as well as for end-users. It will work best in those areas where it can emphasise the core virtue of mobile networks - convenience.

Japan and Korea were one of the first to offer low-cost models to content providers, and the mobile content market is flourishing in those markets. Most of the proceeds flow to the content providers yet, in the rest of the world, the mobile operators are adamant that they want to have a much larger share of the spoils. Strategy Analytics estimated that Japanese consumers made contactless payments worth $900 million using their mobiles in 2006, including prepaid travel tickets. This can be partly attributed to Sony's FeliCa contactless payments standard that has been adopted by banks and mobile phones companies.

Elsewhere in Asia, Taiwan's Far EasTone Telecommunications (FET), the number three Taiwanese mobile operator, has announced plans to launch a NFC payment services early in 2008, following a trial. The trial system, which started in November 2007, is part of the GSM Association's 'Pay-Buy Mobile' initiative which seeks to define a common global approach to using NFC technology to link mobile devices with payment and contactless systems.

During 2008 there will be further trials of mobile payments around the world, including a major European pilot being conducted by O2 in the UK using Near Field Communication (NFC) technology on mobile phones.

In addition to O2, there are numerous European mobile network operators working to develop NFC applications, including Bouygues Telecom, KPN, Mobilkom Austria, Orange, SFR, SK Telecom, Telefonica Móviles España, Telenor, TeliaSonera, TIM, Vodafone, Polkomtel, Elisa and 3.

In 2008 there is speculation that the US may overcome technology incompatibility issues. A study by In-Stat predicted that 25 million mobile phone subscribers in North America would use their mobile phones as mobile wallets by 2011.

In developing markets such as Africa, mobile phones are beginning to be viewed as an opportunity to reach the masses who would not otherwise use banking services or make electronic purchases. While not many Africans have bank accounts or Internet access, many do have access to a mobile phone.

For more information see BuddeComm's -
2008 Global Mobile - Data and Content Markets.

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