Mobile Proximity Payment: Ecosystem

Mobile proximity payment has been discussed for more than a decade, but now it seems close to the maturity and it seems that its mass diffusion has now started. Expectation for Mobile Payment diffusion worldwide is justified by the fact that in 2010 more than three billion people owned a mobile handset [1]. Mobile commerce is a natural successor to electronic commerce. The capability to pay electronically coupled with a website is the engine behind electronic commerce. Electronic commerce has been facilitated by Automatic Teller Machines (ATMs) and shared banking networks, debit and credit card systems, electronic money and stored value applications, and electronic bill presentment and payment systems. Mobile payment is a natural evolution of electronic payment that will facilitate mobile commerce. A mobile payment or m-Payment may be defined, for our purposes, as any payment where a mobile device is used to initiate, authorize and confirm an exchange of financial value in return for goods and services. The proximity factor is the most discussed topic in the mobile payment field and promises a revolution in the world of payments. This article traces the state-of-the-art in mobile proximity payment field and traces the most probable evolution directions. 25 Altran Italia Technology Review No. 7 October 2011< 26 > Altran Italia Technology Review No. 7 October 2011 • Mobile TopUp. The handset is used for recharging the credit for voice/data traffic. In this case, usually only the mobile operator and the handset supplier are involved. • Car parking. The handset is used for communicating the start (end) period of car parking. In this case, a service provider is involved delivering a suitable application on the handset. • Mobile Money Transfer. It is used for sending/receiving funds on the mobile phones: a consumer, whose mobile operator offers mobile money transfer in partnership with a service provider, uses his handset to transfer money cross–border to a receiver, whose mobile operator also offers mobile money transfer in partnership with the same service provider. The funds go directly into the receiver’s mobile “wallet”, or account tied to the mobile handset. • Mobile commerce. eCommerce can be managed by handsets. For instance, eBay transactions can be managed with eBay applications optimized for handsets. From the above examples, it is clear that the term m-Payment is quite generic. This paper is going to analyze in detail that part of the m-Payment area that is now “bubbling”. This area regards the Mobile Proximity Payment, i.e., payments carried on with the handset and with the support of a proximity protocol, namely a protocol that allows to complete the payment (the so called check-out phase) using the merchant’s Point Of Sale (POS). A number of mobile payment applications are not part of this area, namely: • purchases of digital contents from Application Stores, • donations by handsets, • payments on web sites that are not optimized for mobile, • payments by SMS. During the years, a big number of proximity protocols have been used for experiments regarding the proximity payment. Currently, the most promising seems to be Near Fierld Communications (NFC, [2]). NFC has been widely used for a long time in contactless applications, such as access control in buildings and ticketing. Most actors in the business models support this protocol. Members of the NFC Forum, i.e., the standardization forum for this protocol, are hundreds and include the main worldwide players: handset and SIM manufacturers, chipset vendors, MNOs, TSMs, bank services, financial and payment institutions (e.g., VISA), transportation companies (e.g., Transport for London), etc. Moreover, the main players in the mobile field (e.g., Google, Apple), very large MNOs (e.g., AT&T, T-Mobile, Orange), many financial institutions (e.g., VISA, Mastercard) are going to design their strategies for “attacking” this new and promising sector. Additionally, newcomers and joint-ventures are going to disrupt the equilibrium of mobile commerce in general, enriching the payment experience with new value added services. Figure 1 shows an estimate of the mPayment market growth according to a Gplus research [4]. by 2013 Sales of NFC handsets will exceed $75 billions 1 in 5 handsets will use NFC