Mobile payment

Mobile Payment
Assoc.Prof. Dr. Thanachart Numnonda
Director
Software Park Thailand
22 November 2010

Agenda
Mobile Financial Services
Banking 2.0
Mobile 2.0
Mobile Banking
Mobile Payment
M-Payment Technology & Applications
Security
Examples
Suggestion & Conclusion

The convergence of payments
and mobile communications is not just logical
– it is inevitable”
John Philip Coghlan, Visa USA CEO
March 2007

What is Mobile Financial Services ?
Source: Mobile Payment series 2009: www.mpayconnect.com

Mobile Financial Services Video

Mobile Payment Platforms
• Mobile Banking: This will enable users to transfer money
from account to account, pay bills, manage/monitor account
e.g. spending limits, credit fraud. . e.g. Mobile banking
platform providers – Promptnow, mFoundry and Firethron.
•Remote Purchase: Using the mobile phone to purchase
goods through a secure portal, instead of a computer on the
internet. e.g. PayPal’s "Text-to-Buy" enables users to make
remote purchases.
Person to person mobile payments: Where a mobile
device can be used to complete a person-to-person transaction.
Point-of-Sale: Using a mobile device at a physical store front,
at the cash register to purchase inexpensive products quickly
and easily. “

Mobile Money Transfer
1.7 Billion unbanked mobile users (2012)

Business Model
Operators’
involvement
Banks’ involvement
Independent service
provider models
Low
High
High
Low
Collaborative ModelsBank-Centric Models
•Point-of-sale NFC payments
•Mobile Banking - Multiple BanksCustomer->Bank->Vendors
Operators
Customer->ISP->Merchants
Operators
Customer->Mobile Operator->Merchants
Banks
Operator Centric Models

What does it take to replace cash?

Technology & Social Shift

New Business Rules

Communication Shift

Social Networks

Socializing & Sharing

ผลกระทบของ Internet ต่อ Bank

การทำธุรกรรมของลูกค้าธนาคารมีการเปลี่ยนแปลงอย่างมากโดย
ระบบอินเตอร์เน็ต

ภาคการเงินจะเป็นกลุ่มอุตสาหกรรมรายแรกๆที่นำระบบ Internet
เข้ามาใช้กับลูกค้า

ลูกค้าสามารถที่จะทำธุรกรรมการเงินผ่านระบบอินเตอร์เน็ต

การทำธุรกรรมของลูกค้า

การตรวจสอบบัญชี

การโอนเงิน

การชำระเงิน

การลงทุนในกองทุนรวม

บริการบัตรเครดิต

การลงทุนในตลาดหุ้น

Farmer Internet Banking Advertise

การชำระเงิน

Social Lending is already Global

Next Major Computing Cycle
Source: Morgan Stanley 2009

New Trends
Web 2.0
Web as a Platform
OS/Device independence
Large scale computing
Software as a Service
Cloud Computing

PricewaterhouseCoopers 24 August 2010
Slide 40
IT Trends and Social Impact
Mobile 2.0

WiMax
• เป็นโปรโตคอลสำหรับ fixed and fully mobile internet access.
• ความเร็วสูงถึง 40 Mbps และถ้าเป็นมาตรฐาน IEEE802.16m มี
ความเร็วถึง 1Gbps สำหรับ fixed speed
• สำหรับมาตรฐานของ Wi-Fi คือ IEEE802.11
• WiMax เป็นระบบแบบระยไกล สามารถครอบคลุมได้หลาย ก.ม.

Some Key Concepts
Mobile Remote Payment It covers payments that take
place online, in which the mobile phone is used as a device
to authenticate personal information stored remotely
Mobile Proximity Payment It refers generally to
contactless payments in which the payment credential is
stored in the mobile and is exchanged over the air, based on
NFC technology, with a dedicated and compatible payment
terminal.
Near Field Communication It is a short-range radio
frequency communication technology that enables NFC
devices located no more than a few centimeters from each
other to exchange data. NFC devices are totally compatible
with existing contactless technologies like smart cards and
contactless stickers.
Source : Binary Mantra Systems

Mobile Payments 1.0 in Europe 2000-2005
Many early European mobile payment initiatives have failed
– Main reasons for failure are lack of usability and lack of availability
Mobile payments 1.0 in Europe is dominated by Premium SMS
– 20%-40% revenue share for telecom operators
– In 2006 1 Billion Euro purchased through Premium SMS
– Used by 60% of young consumers
Increasing consumer acceptance in niche areas such as m-
parking
– In Croatia more than 50% of all parking fees are paid by mobile
phone .
Europe is far behind Japan and South-Korea
Source : Status of Mobile Payments RFID : Europe 2007

Contactless M-Payment in some countries
Source: Contactless Mobile Payment: ITIF Report 2009

Growth of M-Payment acceptance in Japan

Mobile Payment 2.0 : 2006- 2010
Physical
payments
NFC based
Remote
payments
Mobile
banking
Person
To Person
Public
Transport
Access
Control
Ticketing
NFC Applications
Mobile Payment Applications
Bank’s Perspective
Mobile Network Operator’s
Perspective
Physical
payments
SMS based
Identification
Authentication
Transport
Cards
Contactless
payments
Contactless cards
Mobile devices
Digital
payments

Mobile Payment Value Chain
End Customers – More convenience
Operators - They have fared well in becoming part of
mobile commerce transactions where the items being sold
are delivered on the mobile devices (Ring tones, wall
papers, etc..). Most of the discussed payment systems do
not benefit an operator beyond driving increased usage of
SMS and data services. Revenue share model from Near
field communication (RFID) payment would be a challenge.
Merchants and Vendors - If already registered on eBay,
merchants may provide remote purchase or text-to-pay but
brick-and-mortar merchants will need to see reduced
transaction and implementation cost, and access to
precious customer data to track spending habits.
Source: Mobile Payment Value Chain Slideshare.net

Mobile Payment value Chain
Technology Vendors - Opportunity to sell mobile payment
products and expert advice to operators and financials
institution. Independent service providers will have to
establish trusted brands before they will ever get any
money.
Device Vendors - Opportunity to sell mobile payment
products and expert advice to operators and financials
institution.
Financial institution- Financial transaction fees
Source: Mobile Payment Value Chain Slideshare.net

M-Payment Technologies &
Applications

Mobile Payment Technologies
Near Field Communication (NFC) : is an
evolution of contact-less and short range RFID
technologies.
FeliCa : Sony developed the FeliCa integrated
circuit chip for contactless payments made via
smart cards
SMS: Text based transaction
Over the air data connectivity: Https, SSL, web
browser, XML. Security is comparable to the
internet model.

Technologies Behind NFC
Contactless payment readers
Network connecting them to transaction
processors
NFC-equipped phones
Network for providing mobiles with personal
account information
Software for mobile device UI and back end
server application.

RFID
RFID : Radio Frequency Identification
RFID Tags: Store and retrieve data (with a distant
reader)
History : radar technology, cow identification (year
1970).
Use case examples: road taxes, trace books in
libraires, access card, shops (Wall-Mart).
RFID tags types
– Active
– Passive (without battery)
Source : ARCHITECTURE & DEVELOPMENT OF NFC APPLICATIONS Smart-University 20099

From RFID to NFC
Can communicate with objects
Magnetic field induction
Contactless technology based on RFID 13,56MHz
NFC is standardized ECMA-340 and ISO/IEC
18092
Backward compatibility with ISO14443 and
SmartCard
Millions of readers
Easy to use

Contactless Cards
FELICA (sony) encryption key
– generated dynamicaly at each auth.
Topaz Tag Innovision
MIFARE Standard:
– 512bits UL (no security) used for tickets
MIFARE DESFire
– preprogrammed card
– Example: Oyster Card in London
Gemalto: Mifare 4 Mobile
Contactless Java Card

NFC
NFC allows a device to read and write a contactless card,
act like a contactless card and even connects to another
NFC device to exchange data.
3 modes :
– Card reading (MIFARE …)
– Peer to peer (initiator & target)
– Card emulating
Distance : 0 - 20 centimeters
Bandwidth to 424 kbits/s
NFC Forum : NDEF specs
N-Mark: http://www.nfc-forum.org/resources/N-Mark

Near field communication (NFC)
NFC is a type of radio frequency identification
(RFID) technology
NFC standard is an extension of the ISO 14443
RFID proximity-card standard.
NFC communicates via magnetic field induction
Japan and South Korea use RFID standards that are
not currently interoperable with NFC standards.
Japan uses FeliCa, a proprietary standard. South
Korea uses a passive

Service
provider
Trusted Service
Manager (MNO or TTP)
Application
owner
SIM Card Manufacturer
(Smart Card provider)
Card Issuer MNO
(SIM Card management system)
Contactless service management
platform
OTA NFC Service Management
POS
SIM
NFC
Mobile station
holder

NFC on a Mobile Phone
Contactless
Screen with a user
interface
Security
GPS
Loudspeaker and
Microphone
Keyboard
Camera
Network
TV

Contactless Payment Applications
Payment Transaction
Payment and Information-Based
Transaction
Authentication / ID

Payment Transaction
Mobile payments replace cash/ credit cards
No information component required beyond
exchanging payment details
Includes contactless payments for goods and services
purchased from:
– Big Box Retailers
– Quick Service Restaurants
– Convenience Stores
– Taxis
– Automated Devices

Payment & information-based transactions
Transactions involving exchange of both payment details and
information pertain- ing to the transaction. Data component is
stored on mobile phone’s electronic walllet.
Enables mobile phones to replace cards, tickets, passes, etc.
Enables personalized merchandising and advertising
Uses mobile phone’s electronic wallet to manage, update, pay
for, or check into:
– Public Transit (Tickets)
– Airport Check-in (Tickets)
– Parking Garages (Tickets)
– Movie Theatres (Tickets)

Authentication/ID
Authentication/identification credentials are stored in the
mobile phone’s electronic wallet
Electronic wallet can be used as ID to check into:
– Schools
– Hotels
– Health Clubs
– Office Complexes
– Apartment

Paypal M-Payment Library
Make it easier for developers
– Library design to be integrated less
than 5 mins
Make it better for customers
– More convenience than entering
credit card
– Don't need to share financial
information
A growing feature set
– Payment settled immediately to
PayPal account

SMS Security
The initial idea for SMS usage was intended for the
subscribers to send non-sensitive messages across
the open GSM network.
Mutual authentication, text encryption, end-to-end
security, non-repudiation were omitted during the
design of GSM architecture.
– SMS Spoofing
– SMS Encryption

GPRS Security
GPRS security functionality is equivalent to the
existing GSM security.
GPRS solutions are already in use for mobile payments
across the globe. Application level security should be used
to provide end to end transaction security. Even though
most of the mobile phones support GPRS, not all the phone
user activates the GPRS connection

Security &memory for RFID
tags vs cost
National
ID card
Aircraft
part tag
Passport
label / page
Secure
access or
credit card
Transit
cardTransit
ticket
Library
book
labelItem
drug
label
Retail
pallet
/ case
label
Specification typically ISO 14443 or
15693 (read distance to 50 cm)
7cents Chip cost 3dollars
Security
and/or
memory
size

Industry Groups
http://www.mobilepaymentforum.orghttp://www.openmobilealliance.org
http://www.mobiletransaction.org http://www.mobeyforum.org

The Indian Scenario
Currently registered no. of m-payment users is
close to 3.5 million users
Two types of payment systems are in use at
present;
– Text/SMS based service – Paymate, mChek,
Obopay
– GPRS based service – JiGrahak
In next 3 years, the number is expected to grow to
9 million users due to increase in quality and
adoption of handsets

NFC on iPhone
http://www.nearfield.org/
NFC already on iPhone:
Stickers, 30-pin RFID readers, SIM add-on…

Exchange data, P2P
Configuration (bluetooth pairing)
Vending machines, service maintenance
Loyalty, couponing
NFC poster, get information
Ticketing
Medical, home care
Web applications
Payment solution
Access control
Mobile signature
Etc.
Added value services

NFC Use cases

Mobile Ticketing
 A customer books two tickets for a concert.
 He pays and downloads his tickets on his
mobile phone with a simple touch.
 He meets with his girlfriend and transfers
the ticket on her mobile.
 They arrives and unlock security gates
thanks to their NFC mobile phone.
14 millions RFID tickets
were produced by ASK
for Olympic Games in
China -
http://www.ask-rfid.com
 Mobile tcketng will become more popular over the next few
years, with 2.6 billion tckets worth $87 billion, delivered by
2011
Juniper Research (April 2008)

NFC in the World (2009)
http://www.nearfieldcommunicationsworld.com
Japan with Sony FeliCa, NTT DoCoMo
NTT Docomo reports 10 million mobile credit card
customers
StoLPaN « Store Logistics and Payment with NFC » is a
pan-European consortium supported by the European
Commission’s Information Society Technologies program:
http://www.stolpan.com
Akbank and Turkcell test NFC in Istanbul
Visa launches NFC trial in Brazil
Citi launches NFC trial in India
Telefónica launches O2 Money, says it is ready to deploy
NFC
Nokia Money
41 NFC-related trials and launches in the Asia-Pacific
region so far…
etc.

NFC in France
(2009)
 Disneyland Paris to test NFC and contactless cards
from October 2009, with Crédit Mutuel and CIC
banks.
 Smart-Park with VINCI Park and Monext.
 Paris Metro: Paris transport operators to launch NFC
ticketing from the end of 2010. STIF will coordinate the
Paris transport operators (Optile, RATP and SNCF
Transilien) and the participating telecoms operators
(Orange, Bouygues Telecom and SFR).
 Pegasus workgroup: multi-operator (Orange,
Bouygues Telecom, SFR), multi-bank (BNP Paribas,
Groupe Crédit Mutuel-CIC, Crédit Agricole, Société
Générale) with MasterCard, Visa Europe and Gemalto
for mobile payment in two cities: Caen and Strasbourg
 Nice NFC city
http://www.afscm.org/entreprises/nice-ville-nfc

Case Study: NFC Transport
Ticketing in Hanau and Frankfurt
• Description:
NFC based ticketing for public transport
passengers in Hanau and Frankfurt. Now
expanding into broader information, loyalty,
payment and ticketing applications, for example
with the Erlebnis card
• Start: 2005, now commerically
available
• Users: Inititially 200, but growing.
• Key Words: public transport ticketing
• Handsets: Nokia 3220
• Operator Vodafone
• Chip: NXP
• Others: RMV (Rhein-Main-
Verkehrsverbund), T-Systems
Source : Status of Mobile Payments RFID Europe 20099

Case Study: NFC Consumer
services in Cinema, Thailand
• Description:
NFC based consumer applications such as
information, ticketing and marketing at cinema
complex in Bangkok, Thailand
• Start: 2007
• Users: Inititially 200, but growing.
• Key Words: marketing, ticketing
• Handsets: Nokia 3220
• Operator
• Chip:
• Others: PayZy
Source : Status of Mobile Payments RFID Europe 20099

NFC Devices
NFC Phones using single wire Protocol and UICC
(08/2008)
The Sagem my700X
The LG L600V
The Nokia 6131 SWP
The Motorola SLVR L7
All devices are more or less concept devices and come
with an InsideContactless NFC Chip.
In order to develop applications with these devices a Dev
Kit (like the Gemalto Developer Suite) and a SWP UICC is
required. All four devices are already capable of using
SCWS.

107
Press release:
Alcatel-Lucent partners with Clear2Pay for mobile
payment framework
Gateway
Banking
Post Pay
Systems
Voucher BO
APIs
Application
Correlation
Server
Stored Value
Accounts
Server
Profile
server
Subscribers
Points of sale Telco – Non Banking
PingPing SVA
Interactive Billboard

Issues
Trust
Standards
Privacy
Regulation

NFC keys of success
Reach and availability
The availability of NFC phones and SIM card
Variety of use
Ease of use
See iphone
Security
Be able to lock payment card
Added value services
Advantage for customer ?
Infrastructure
NFC access points in shops
Complex value
chain
+
Mobile OTA B2C
battle

Suggestion
Governments should assume a leadership role in
promoting and adopting mobile payments.
– Ensure senior government leaders highlight the benefits
of contactless mobile payments.
Articulate clear consumer protections for mo-bile
payments.
Address legitimate security and privacy concerns, but
recognize mobile wallets are likely to be more secure
than physical wallets
Encourage competition and do not favor en- trenched
interests.

Thank you
thanachart@swpark.or.th
twitter.com/thanachart
www.facebook.com/thanachart
www.swpark.or.th

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