Mobile devices (phones, wireless handsets, PDAs or RF devices).
Banks hold the payment industryMany changes in last decades like Euro and Y2K halt development of payment products.
Near field communication (NFC) is a revolution made by using RFID and Mobile phone . By integrating RFID tags with mobile phones especially in the cover where they act as the contactless device, payments can be made by using mobile phones when waving them in front of an RFID reader such as smart posters, ticketing or couponing. NFCs lack an existing customer base that seems to be problematic in this scenario. In addition, the need to invest in new infrastructure, creating a brand and gain customer support makes this scenario too less likely to be applied in the meanwhile.
cross-boarder should be fast enough as domestic.Lead to easy to learn.only the intended amount of money being paid is transferred with no errors in which the customer has to make correction transactions. should be fast enough and no performance issues occur due to the amount of transaction being processed.
the same in the P2P mobile payment system for people who are concerned with privacy issues. With the existence of mobile phones, some users would want to be able to track their payments to other people to have a proof of payments. This issue may require relieving the Anonymity criterion to accommodate this.2. the monetary system is remain secure against any theft of the account and therefore protecting the account of the original user. This issue once resolved in the mobile payment system, it can overcome vulnerabilities associated with cash when for example a wallet is burgled.3. Any attack of this form should cancel the transaction immediately
2. any attempt to break into the system, it should be automatically destroyed.
As the growth in remittances is steady and the ubiquity and worldwide spread of mobile phones all over the world make expanding the paper based mechanisms to handle money transfer into mobile based seems promising. Although the money transfer market is stable with the existence of organizations such as Western Union and MoneyGram, the competitive advantage mobile phones services employs is promising where the competition will increase and costs will decrease
Although some regulations prohibit the usage of mobile phones for monetary purposes as agreed with domestic regulationsdomestic financial institutions like western union that handles international transactions and managing foreign exchange risk.
Peer to-peer mobile payments
Peer-to-Peer Mobile Payments Presented by: Ishraq Fatafta
AgendaO Introduction.O Mobile Payments Overview.O Peer-to-Peer Payments O P2P Mobile payment Model. O P2P Mobile payment design issues. O P2P Mobile payment value chain.O P2P Mobile payment types.O P2P Mobile payment evaluation.O Conclusion.
IntroductionO Javelin Strategy and Research stated that customers want more high-speed transactions for their payments but only one in a ten is willing to adopt Peer-to-Peer mobile payments.O Peer-to-Peer mobile payments are changing the way we pay for things; interact with our families and friends and draw more reliance on mobile phones.O Security, convenience and trust are the main drivers for adopting Peer-to-Peer mobile payments.
Introduction Cont.O 25-44 years-old and consumers earning more than $100,000 per year are the most willing to use mobile P2P payments.O 39% of 45-55 years-old indicated that anytime, anywhere access to their money was important, but only a fraction of the group (14%) said they are likely to use mobile P2P payments.
Introduction Cont.O 55-64 years-old, who care more about sending and receiving money quickly than any other age group (39%), but only 11% are likely to use mobile P2P payments.O Among 18-23 years-old consumers, 23% indicated that avoiding cash and checks was their primary motivation to adopt the service.
Mobile Payments Overview Cont.O Any financial transaction conducted through a mobile device in return for paying goods and services.O Payment schema: easy to use, useful and provide a degree of trust.O Earlier adoption of mobile payments suffered from: O Technical challenges. O Unapproved return of investment. O Lack of standardization and fragmented research efforts in this field.
Mobile Payments Overview Cont.A Day in the Life of a Mobile PaymentsCustomer
Mobile Payments Overview Cont.Roles in Mobile Payment schema:O Financial institutions.O Mobile network providers (Carries).O Retailers and Merchants.O Customers.
Mobile Payments Overview Financial InstitutionsO Banks and Card issuers.O Bank account is linked to customers mobile phone number.O Questions Raised: O Revenue to achieve. O Attraction of new customers or segment.
Mobile Payments Overview Mobile CarriersO Charge customers for their mobile bills.O Own SIM, UICC handsets. O UICC: Universal integrated circuit card O provide security when connecting to the mobile network by holding confidential information in cryptographic format. O World-Wide standard, Security properties.
Mobile Payments Overview Retailers and MerchantsO Upgrade their payment systems to accept mobile payments.O Point of sale.
Mobile Payments Overview CustomersO Large segment of mobile users.O Payers are not welling to pay for paying.O Value added by using mobile phones for payment.
Peer-t0-Peer ModelO Not New model.O A common every day activity.O Western Union. O High charging fees. O Cheaper alternatives.
Peer-to-Peer Mobile payments O A model proposed by Smart Card Alliance with three scenarios: 1. The usage of contactless devices for customers and POS equipment at merchants. 2. The usage of payment applications in NFC enabled mobile phones. 3. The usage of existing payments applications available online.
Peer-to-Peer Mobile payments Examples O PayPal mobile: PayPal uses mobile phones to perform payment transactions in a form of money transfer from one PayPal customer account to another PayPal customer account. In addition payments for purchases from merchants who accept PayPal payments. https://www.paypal.com/au/cgi- bin/webscr?cmd=xpt/Marketing/general/Acc ountOverview-outside
Peer-to-Peer Mobile payments Examples O Obopay: Obopay uses mobile phones to transfer money from one person to another for $0.10 per transaction fees. Due to their partnership with Citibank, any customer who is not an Obopay member can download transferred money through Obopay websites to a stored value account in Citibank using MasterCard for 2.5% transaction fee or to demand deposit account free of charge. http://www2.obopay.com/merchant/go_mobile. php.
Asia PacificO Leader adapters : O Japan and Korea.O Mobile tigers: Market driven by smartcard developments O Hong Kong and Singapore.O The Giants: Growth in the market O China, India and Indonesia.O Mid-market O Thailand and Malaysia.
Peer-to-Peer mobile payment design issuesO When designing the mobile payment system, a number of consideration should be addressed: O Payments should be fast, and overcome change issues in cash. O Payments should be easy to use, understood by different people from different ages and technological expertise. O Payments should be reliable, in terms of accuracy and performance.
Peer-to-Peer mobile payment design issues, Cont. O Cost, affordable by customers and compete other payment methods. O Payments should be secure, O Anonymity, tracking a particular payment is not possible. O Protection against theft, secured with authentication measures and encryption techniques . O Protection against interruption, attacks on the radio frequency domain.
Peer-to-Peer mobile payment design issues, Cont. O System replication, prevention against taking a backup of the system. O Immunity to any trial of tampering and changing in the payment system.
Peer-to-Peer mobile payment value chainO Peer-to-Peer value chain is a chain of activities the P2P service provider perform in which at each activity, a value is gained.O Value gained by service provider in form of: O fees for downloading and licensing the payment system by customers and merchants. O marketing revenue from merchants and issuers targeting customers and users of the system can be collected.
Peer-to-Peer mobile payment value chain, Cont.
Peer-to-Peer payments typesO P2P payments can take a lot of forms including Money transfer, account transfer, international remittance, inter- personal commerce, sharing a meal, purchase of tickets, sharing rent, giving money to a student or family member, paying for events, making a donation and making payments for auction purchases.
Peer-to-Peer payments types, Cont.1. Domestic fund transfer O family members and friends are spread out across the country. O attractive to families and teenagers who cannot own a credit card. Immediate transfer of money in emergency situations, allocating teen allowances, paying for school trips, sending fund to college child, buying books.
Domestic fund transfer Cont.O Traditional Fund transfer process includes the following parties: O Originator: the initiator of the fund transfer. O Beneficiary: the party that is credited or gets paid as a result of fund transfer. O Originator’s financial institution: the financial institution that receives the transfer instructions from the initiator. O Beneficiary’s financial institution: the financial institution that credit or pay the beneficiary party.
Domestic fund transfer Cont.O Mobile based fund transfer eliminates the need for all of these parties every time fund needs to be transferred. By having an account with a P2P mobile payment system, both parties can transfer and receive funds directly to their mobile accounts.
Peer-to-Peer payments types, Cont.2. International remittance and unbankedpeopleO When a fund is transferred from one location to another between countries.O typically generated by migrant workers abroad sending money to their families in their home countries using different currencies.
International remittance and unbanked people Cont.O Mobile phones conducting Peer-to-Peer transactions, transferring money and remittance, financial institutions can benefit from this to reach more and more people especially in the developing world who don’t have any bank account.O International remittance transferred forms: O Mobile to cash O Cash to mobile O Mobile to mobile
International remittance and unbanked people Cont.O Various parties are involved in the money transfer system: O Mobile Operators O Financial institutions O Peer-to-Peer mobile payment system provider O Customers
International remittance and unbanked people Cont.Strength WeaknessesLarge well-defined market Requires local and global knowledge.Opportunities ThreatsLack of financial alternatives Competitive barriers by forfor the unbanked in existing leaders like Westerndeveloping and emerging Union and MoneyGrammarkets.
Peer-to-Peer mobile payment model evaluationO POS issues should be handled such as supporting a large number of POSs merchants to accommodate customers, ensuring that these transactions are convenient, the same for NFC. In addition, convincing banks, merchants and customers with the liability of this model and the ability to resolve dispute issues and charge backs.
Peer-to-Peer mobile payment model evaluation Cont. Advantages DisadvantagesBank Potential partnership with Customer’s either P2P service provider transactions are or Mobile operators. invisible. Revenue from processing Lost opportunity if fees. the service provider Expand the reach for more chose other banks. customers.Mobile operator Potential partnership with Customer services either P2P service provider needed. or banks. Lost opportunity if Possible increase in the service provider volume of data transactions. dose not partnership with mobile operators.
Advantages DisadvantagesPeer-to-Peer Revenue from High initial costs.Service Provider downloading and Potential risks of licensing fees. theft and fraud. Marketing revenue. Not widely used to date.Merchant Reduction in processing Potential risk of costs for debit and credit. fraud. Faster collection of Fees paid for P2P payments. service providers Potential increase in even for small purchases. purchases.Customer Reduction in fees cost Potential fees for international charged by the P2P remittance and money service provider. transfer. Inexpensive fees for downloading the payment system.
Customer and merchant relationshipO When P2P payments occurs between both customers and merchants, the payment processing can be handled by either the P2P mobile payment service provider or by the mobile operator itself with collaboration with financial institutions.
Customer and merchant relationship Cont. Advantages DisadvantagesP2P mobile Enable customers to pay Disrupt the userpayment for their purchases experience.service regardless to the mobile Reduction in the brandprovider operator to which they awareness of these subscribe for at any P2P payment systems. time.Mobile P2P payments on the Interoperabilityoperators fly. between different mobile operators is not highly enforced and hence limits P2P payments to those using same operator.
ConclusionO Researches show increased interest in mobile Peer-to-Peer payments in the developing countries more than developed countries.O Security and reliability issues are the main concern in mobile payments where convenience and speed are main factors in motivating the adoption of Peer-to-Peer mobile payments.
Conclusion Cont.O People are showing interest in P2P mobile payments for its availability at anytime and anywhere and the low fees associated with transferring money.O Main sectors that will benefit from this technology are unbanked people who lack bank accounts, in addition to immigrants who wish to transfer remittance to their families and friends.O More serious steps should be taken specially from financial institution who have their own closed loop of mobile P2P payments before wireless carriers take over P2P mobile payments.