Waiting for the creation of a viable mobile payments system for Europe has been like watching paint dry, but this week there were some stages along the way to making it a reality and the mobile community is finally getting down to the business of defining the type of organization that will run the whole shooting match ‘ what they call a Trusted Service Manager (TSM).
The GSM Association which looks after the cellular community’s contribution and the European Payments Council, which has been looking after European Banking interests, are getting together to define the contracts detailing minimum requirements so that a Trusted Service Manager can interface with banks and mobile operators. The idea is that there needs to be a handful of companies in each country offering software downloads and systems and network integration, in a way that is compliant with a banking class security system, providing the bridge from cellular gateways into banking applications.
It occurs to us that when a handset is lost in the future, it will be like losing your home keys (NFC to get into your house), your wallet, your phone book, your personal TV, your music collection and your’ oh yes, your phone. So someone ought to be inventing services to put a stop on these systems, and at the same time re-install these services and get them up and running again fast in the event of a lost device
Trusted Service Managers (TSMs) should come into existence by the end of this year, then payment services begin to roll out during 2009. From the consumer point of view transport tickets, stadium tickets, car park transactions and other micro payments will, at a stroke, move across to the handset. Near Field Communication (NFC) standards are now established, mostly built around work that Philips Semiconductor (now NXP) and Sony have done over the past four or five years.
So there are already available chips for NFC and with SIM based UICC chips, which host secure applications, handsets will be ready shortly which double as a wallet, certainly by early next year.
The European Payments Council says its represents 8,000 banks in Europe and it will work together to accelerate the deployment of services in shops, restaurants and on travel services using mobile phones for payment.
Most of the trials held to date have used the MasterCard PayPass application which means that the handset is passed near an NFC sensor, the transaction is carried out, and the data is then sent encrypted through the service network to the credit card company which then requests payment. Presumably the money is paid straightaway to the bank of the service vendor, and at the end of the month the credit card is paid off automatically, just as if a credit card had been used for the payment.
Back in pre-2000 most of the major cellular operators looked hard at partnering with major banks for a bewildering number of cellular payments and all agreed that they didn’t want the billing job, given that their own billing was problematic enough, kicking it back to the credit card companies to handle.
Back in 2007 seven mobile operators AT&T, FarEasTone, KTF, Orange, SFR, Softbank and Turkcell each began running trials the technology and more trials were planned to begin about now near future, and so far 44 mobile operators around the world have pledged support to the Pay-Buy-Mobile initiative.
As a related announcement the GSMA said it will release this Summer its minimum set to requirements for handsets, detailing the NFC-enabled UICCs and NFC chips which will be allowed to be used for mobile payments services. This will include the use of a new protocol called the Single Wire Protocol, which provide a secure link inside the device between the UICC and the NFC chips.
All of this is supposed to tempt the Nokias and Samsungs and other handset makers to begin specifying handsets which contain these standards sooner rather than later, so that many devices that are in the market in early 2009 will be payments ready.
Alex Sinclair, Chief Technology Officer of the GSMA. ‘We expect mobile operators to begin placing orders for these handsets this year as they prepare to rollout mobile NFC services, some of them in partnership with banks and credit card issuers.’
At present the GSMA is still expecting a final round of suggestions from handset vendors, including how the handset’s user-interface should work and things like how to allow a device to work as a wallet, when it has run out of battery. The requirements will be finalized this autumn.
Nokia has been offering NFC handsets for some months now, and earlier this year, Motorola took the lead role in a new pan-European consortium formed to develop an open architecture for the development, deployment and use of NFC in handsets (the group’s project is called ‘Store Logistics and Payment with NFC or StoLPaN).
In Japan DoCoMo generates a strong revenue stream by using its parent’s banking services, with the mobile network acting as a marketing channel for banking services and it is likely that most cellular operators will end up partnering individual financial institution and indulge in cross marketing.
But of course with mobile payments coming soon it also makes sense to offer mobile banking and the GSMA Pay-Buy-Mobile initiative doesn’t quite go this far. In the US Qualcomm acquired a specialist start up last November called Firethorn for $210 million, simply because it has cut deals with both AT&T and Verizon to offer access to online banking via the handset. The US has its own special problem in that almost universally US customers refuse to use direct debits and standing orders to the extent where the banking system hardly supports them. Many jobs also are still paid every two weeks in cash, and people have to deposit their salaries into the bank themselves. This means that US households have an enormous number of individual payments to make each month, and they need PC, and eventually handset, applications to facilitate this approach to finance.
In Europe online banking will probably be dealt with using the mobile web and existing online services.