Total Telecom 05/05/06

New SMS mobile payment system is launched

By Lorraine Turner, Total Telecom

New service called LUUP launched in U.K., Germany.

A new mobile phone payment system enabling peer-to-peer payments via SMS has been launched in the U.K. and Germany. The LUUP service – known as LUUPAY in Germany – also allows subscribers to pay for service such as ringtones or transfer money.

The service is fully integrated with the U.K. and German banking systems, enabling funds to be accessed from credit cards, debit cards and bank accounts. Once the LUUP wallet has been credited, the user can save money in an account, use it for purchases with LUUP merchants or transfer it to their bank account.

The new mobile payment method targets Premium SMS methods of payment in particular. "We wanted to replace Premium SMS with a new payment method and LUUP offered the ideal alternative; no change to the customer experience, yet fees are so much less than Premium SMS," said Chris Michael, managing director of INTOmobi, a ringtone provider.

Merchant partners will pay less than 10% of the transaction fees on payments compared with 25% for Premium SMS operator fees. Other merchant partners for the mobile payment solution include ringtone firms Web2Txt, RealMusicTones, gaming companies Elite and PocketPlay and international calling card provider Swiftcall.

All online payments and person-to-person payments are confirmed using a pin code. LUUP uses 128-bit SSL encrypting as well as IP and user password-based client authentication to protect personal data. LUUP accounts are created by SMS and full registration online. The service is available to anyone over the age of 14.

"We are very excited to unveil the LUUP payment solution in two markets where consumers are hungry for ways to use their mobile phones in exciting and innovative ways," said Jeff Lamont, chief marketing officer at LUUP.

Mobile phone payment solutions are at an advanced stage in markets such as Japan. KDDI announced ties with the Bank of Tokyo-Mitsubishi last month. The companies will create a new bank specialising in services through mobile phone handsets.

NTT DoCoMo has a credit-payment alliance with Mizuho Bank and Sumito Mitsui Financial Group.