MOTO transactions require credit rating systems, e.g. as run by large catelogue companies New channels are outside the existing model, so invent SSL, SET etc (see Next slide) If new devices accept IC cards, then new functions required by online merchant servers Managing new transport protocols, databearers, error handling, encryption etc required Standard interface provided into the existing transaction payment schemes More fundamentally, the inefficiencies of subscription as a method of payment, especially in the mobile telephony and Pay-per-view TV industries, indicate enormous opportunities. Conservative studies estimate 20% of the cost of a mobile telephone call is related to billing and bad debt; new figures from Equifax, the marketing and information service provider, show that 9.4% of UK mobile phone bills went unpaid during the third quarter of 1997.
SIM=Subscriber Identity Module
- the scenario begins by the mobile user contacting the `coke server` in the network, e.g. by typing in an address printed on the vending machine. - this sceanrio is for a weak POS which is not connected to the network; the solution when the POS is connected is the same as the regular web solution. - the POS needs only very minimal processing, to verify the `receipt` which is an authenticated message from the `coke server` in the network. Notice this is simple, efficient shared - key authentication - very inexpensive. - some communication mechanism is required to send the receipt - it could even be manual (i.e. the mobile displays a code to be manually entered into a small keypad on the vending machine). Or of course IR / Bluetooth / anything else can be used.
Electronic Payment Systems 20-763 Lecture 13 Mobile Payments, Virtual Money
Mobile Payment Players User Network Operator Financial Institution Content Provider/ Merchant
Mobile Payment Issues User Network Operator Financial Institution Content Provider/ Merchant <ul><li>Security </li></ul><ul><li>Privacy </li></ul><ul><li>Ease of Use </li></ul><ul><li>Devices </li></ul><ul><li>Open Standards </li></ul><ul><li>Inter-operability </li></ul><ul><li>Roaming </li></ul><ul><li>Authentication </li></ul><ul><li>Integrity </li></ul><ul><li>Non-repudiation </li></ul><ul><li>Fraud reduction </li></ul><ul><li>Getting Paid </li></ul><ul><li>User adoption </li></ul><ul><li>Low Cost </li></ul>Issues SOURCE: ARVANI GROUP
Current Business Models <ul><li>Card based (Visa, MC) </li></ul><ul><li>Carrier based (DoCoMo) </li></ul><ul><li>Third party (PayBox) </li></ul>SOURCE: ARVANI GROUP
Mobile Card Systems MOTOROLA P7389 TRIBAND WAP PHONE WITH SMARTCARD READER
Mobile EMV Chip Debit/Credit WAP, i-Mode SET or SSL/TLS Acquiring Bank Issuing Bank Acquiring Payment Engine Gateway Wallet Server Voice or IP Browsing & Offer Request Option 2: Dual slot phone with full size EMV Merchant Offer Purchase Request Authorisation Request / Response Shipment Confirmation M/CHIP transaction with ARQC and ARPC / ARC data classed as “Card Present” Transaction Wallet forwards address details SOURCE: MAOSCO Clearing & Settlement Merchant OPTION 1: Multi-app: SIM + EMV (CEC)
Mobile Phone Future Millions 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 More handsets than PCs connected to the Internet by the end of 2003 ! Projected cellular subscribers Projected PCs connected to the Internet Projected Web handsets
Mobile Payment Population Growth SOURCE: CELENT
Paybox paybox SOURCE: PAYBOX NORDIC AB ...entering the paybox-PIN on the mobile phone 4 Clearing& settlement is done via electronic direct debit 5 Consumer authorises the payment to the Internet shop by... 3 Consumer has goods in shopping basket and selects “paybox - pay with mobile phone“ on website 1 paybox connects transaction partners and rings consumer on mobile phone 2
Paybox Combines Networks AUTHENTICATION AND AUTHORIZATION MADE OVER GSM NETWORK Transaction Space Internet Payment Space Banking Network Authorization Space GSM Network TRANSACTION TRIGGERED OVER THE INTERNET PAYMENT MADE THROUGH BANKING NETWORK SOURCE: PAYBOX NORDIC AB <ul><li>works with any mobile phone </li></ul><ul><li>any network provider </li></ul><ul><li>supports WAP via GPRS or UMTS </li></ul><ul><li>high taxicab penetration </li></ul><ul><li>6% of all B2C in Germany </li></ul>
Paybox Features <ul><li>Payment authentication by mobile phone, relies on SIM identification and GSM encryption </li></ul><ul><li>Started in May 2000 in Germany, now also operational in Austria, Spain and Sweden with more to come (e.g. Britain) </li></ul><ul><li>50% owned by Deutsche Bank </li></ul><ul><li>Amounts: starting at about 1€ </li></ul><ul><li>Transfer to other mobile phone (1-2% or 25 cent fees) or bank account possible </li></ul><ul><li>Offline shopping possible </li></ul>
Paybox Cross-Border Mobile Payments PIN authorization Direct Debit Crediting Account at ANY bank in ANY country Money Transaction Provision of Goods and Services Purchase Consumer Merchant Call on GSM network Transaction Request and Confirmation Paybox: Transaction Instruction Engine Deutsche Bank´s Network Merchant Account at ANY bank in ANY country Consumer Clearing System via EDI SOURCE: PAYBOX
User )))) OPERATOR NETWORK + Processor +Issuer/ Acquirer If PIN not entered directly Mobipay Internet Merchant Mobipay System with Access Node router WEB WEB GSM Vending Machine OR 1. User chooses Mobipay payment method on merchant site 1 REF: 01021234 Alternative : + PIN 3 3. User sends reference (+ PIN) 4 4. Data validation 4 5. PIN request REF: 01021234 1500 ptas Store X PIN: - - - - - 5 7 7. Authorisation 2. Merchant sends unique Mobipay reference asociated with amount Product .....: REF. 1234 2 6. PIN response 6 REF: 01021234 1500 ptas Store X PIN: 12345 Delivery REF 1234 Store x OK 8 8. Confirmation 8
International Mobipay CLIENT FROM COUNTRY B MERCHANT Country A Country B GSM Roaming Local Mobipay Local Mobipay Acquiring Bank Issuing Bank Mobipay International 1 2 3 4 4 5 6 Current international card infrastructure 7 Principle : Use existing international payment infrastructure SOURCE: MOBIPAY 0
T-Mobile Micropayment Service Mobile commerce platform Content Billing Advertising Location Based Services Customer: mobile devices Mobile Gateway Micropayment Public Key Infrastructure Application Repository Merchant: Point of Sale Financial Institution SOURCE: T-SYSTEMS 2. Upload application and credentials 2. Sign purchase order 3. Return signed purchase order 1. Send purchase order Clearing and settlement 1. Provide Customer‘s keys and certificate Application and credential upload 4. Check signature 1. Register Customer registration b) Check purchase orders a) Send collected purchase orders regularly c) Clearing and settlement 2. Certification request 3. Create key pair and certificate
Digital Wallets <ul><li>Files or devices containing payment information, possibly representations of money </li></ul><ul><li>Used for seamless payments, without significant user intervention </li></ul>SOURCE: LAUDON & TRAVER
How Microsoft Passport Works SOURCE: LAUDON & TRAVER
Major Ideas <ul><li>Mobile payment is expanding rapidly </li></ul><ul><li>Wallets yield great conveneince </li></ul><ul><li>Blind digital signatures are possible </li></ul><ul><li>eCash is a minor development </li></ul>
mCommerce: Replacement for Cash & Card Mobile Payment Platform Call Center Vending, Access, Ticketing, etc. Users WWW SOURCE: SONERA Data Telco network Internet Financial Institutes / Telco billing External Business Systems
A Mobile Payment Scheme 1. Offer (WML/HTML, PFL) 4. Request PO (API) 5. Certified PO Mobile Gateway Mobile PSP 6. Certified PO 2. Offer (WML) 3. Payment Authorization Merchant Mobile buyer Merchant ’ s PSP 0. Routing 0 7. Deposit 8. Deposit SOURCE: NEWGENPAY.COM
Mobile Aggregators SOURCE: VERTICAL ONE SEE ALSO YODELEE2GO WIRELESS BANKING: EDS
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