Thursday, March 29, 2007

Belgium launches mobile payments - NOC

Belgian mobile operators launch m-payment service

Buy waffles with your phone

Belgium's three main mobile operators, Belgacom's Proximus, KPN's BASE and Mobistar, launched a mobile payment system on Tuesday.

The operators have teamed up with electronic payments company Banksys and Belgium's banks to offer the service, which is designed to enable mobile users to pay for home deliveries, tradespeople, or indeed anyone providing a service, with their mobile handsets.

It is available to all BASE, Mobistar and Proximus customers. Users must have a SIM card enabled with Banksys' m-banxafe technology and a Belgian bank card featuring Bancontact or Mister Cash debit facilities.

The mobile operators will generate revenues from the service by charging a fee to both the end-user and the payee in each transaction. Customers will pay €0.25 including VAT and merchants €0.49 excluding VAT. The operators will not charge a connection or subscription fee.

In order to use the service, customers have to register their SIM card and link it to their bank account.

To carry out a transaction, the payee makes a request for payment using his mobile phone. The paying party then receives a text message asking for payment, which he then authorises using a passcode. Both parties receive a text message confirming the transaction.

The payment is carried out as though the customer had used his debit card.

In a joint statement, the mobile operators and Banksys noted that the scheme is a practical solution for customers who don't have cash to hand and cannot get access to an ATM. From the tradesman's point of view, the service provides security in that it guarantees immediate payment.

BASE, Mobistar and Proximus have been working on the service for some time, having initially announced plans to provide m-payments using m-banxafe technology in July last year.

Wednesday, March 28, 2007

Springwise on Bankless Banking

We've written about peer-to-peer lending marketplaces before: Zopa (UK) and Prosper (US) both allow people to lend money directly to others, cutting out banks and other middlemen. Which means better interest rates for borrowers and higher returns for lenders. Described as eBay for loans, the P2P money exchanges work as follows: borrowers list loan details and a personal profile, and lenders bid on the loan. Lowest interest rates win. Lenders bid in increments and minimize their risk by bidding on numerous loans.

A study by Online Banking Report predicts that by 2011 person-to-person lending in the US could surpass 100,000 loans a year, worth more than USD 1 billion. Unlike eBay, which can connect buyers and sellers from around the world, peer to peer lending is generally bound by local financial regulations. Which means there's ample room for national or regional versions. A quick run-down of our most recent spottings from the realm of social lending:

Boober | Launched last month, Boober is bringing peer to peer lending to The Netherlands. The start-up works much like Zopa and Prosper, with prospective borrowers listing the amount they want to borrow, their credit rating, purpose of the loan, interest rate they're willing to pay, etc. Credit ratings are determined by credit report agency Experian. And loans to AA and AAA borrowers are guaranteed by debt collectors Intrum Justitia, at 90% and 99.5% respectively. Investors are required to distribute their capital over at least 10 borrowers to minimize risk. Borrowers pay EUR 19.95 to have their credit rating determined, and if their loan is funded, they pay Boober a yearly fee of 0.5% of the loan. Investors pay a yearly fee of 0.5% over the funds they've invested, as well as an annual contribution of EUR 9.95.

Boober's founder, Guus Drijver, doesn't hesitate to share his feelings about why Boober is better than the Big Banks: "Boober doesn't work with hidden costs and is completely transparent. We don't sponsor yacht races or soccer teams, and don't have expensive headquarters or pay thousands of people high salaries." Boober isn't alone in this sentiment; many consumers are equally discontent with banks and their high profit margins, driving interest in alternatives like p2p lending. After a beta phase in The Netherlands, Boober hopes to expand to Belgium and Germany.

Website: / Contact:

Smava | In Germany, Boober will have to compete against Smava, which launched earlier this month. Smava currently allows loans of EUR 500 to 10,000. The company charges borrowers a 1% fee of the loan amount and EUR 10 for a credit check. Unlike Boober, Smava is following Prosper's lead by encouraging borrowers to form groups. By adding a level of peer pressure and control, tight-knit groups help lower the risk of defaults, boosting a group's reputation and attracting lenders at better rates. Smava's backers include Stefan Glänzer of and

Website: / Contact:

CommunityLend | Set to launch in Fall 2007, CommunityLend hopes to revolutionize the way lending works in Canada. A test phase over the next few months will let users set up profiles, manage loans, bid on auctions and create groups without using real money. One to watch! Or invest in ;-)

Website: / Contact: | Meanwhile, feeder businesses are starting to pop up, too. Just as eBay spawned offline drop-off shops to facilitate online selling, Prosper has led to the creation of, which aims to provide extra information to help borrowers and lenders make smart decisions: "With currently approx. 103,432 listings in over 989 groups created by over 46,779 borrowers and over 8899 loans successfully funded, it is hard to identify overall trends and find the pearls. is dedicated to serve as an automated clerk, offering you the information you need."

Website: / Contact:

Spotted by: Marijke Krabbenbos

Tuesday, March 13, 2007

came across a post from a year ago

Google hosted mobile monday

Date: Wed, 2006-02-08 08:57

I went to the 4th monthly Mobile Monday London (aka momolondon), my third one. I missed the one last month at Yahoo's offices because I was in Turkey.

Google really laid on a slick hosting job. They had nice printed signage, including a label on the elevator button for the floor to go to, coat check, free t-shirts and pens*, plenty of free booze and food handed out by catering staff wandering the floor. The presentation equipment was also tops, dual projectors and the presenters' slide shows were technically seamless.

* Figuring out how to open the free pen may be an example of the infamous Google recruiting tests, it took about 3 or 4 different approaches before I figured it out. Maybe not something to brag about.

Oh yeah, the presentations themselves were pretty interesting as well. The theme for the evening was payment systems, in other words, ways for content providers to make enough money to make it worth doing. This probably is the biggest thing holding back the content industry, shady ring-tone clubs aside.

Shannon Maher from Google gave the first talk, and although it was the one least targeted to the theme, I think that most of the attendees, sated with Google-booze and delicious toothpick-meat, didn't mind. Google is building a new London-based mobile engineering team to complement their team in California. It sounds like their main reasons for doing this are to tap into the European mobile scene, given that as Mr. Maher said, the UK now has 100% penetration versus 70% in the US; and for partnerships with external organizations, including carriers (mobile network operators, as I usually call them), OEM's, and "industry", whatever that means.

Maher was fairly cagey on the specifics of Google's product plans, at one point begging that he hopes not to see his offhand musings blasted onto front pages the next day as announcements of new Google services. He said the first step is to bring existing properties onto mobile, then step 2 would be to innovate, and design for the mobile experience.

One thing he mentioned that I think resonated well with attendees is that Google considers small content providers as being of key importance, and wants to help them out. In an industry which cripples itself with walled garden strategies, breaking down the walls is the only way to get the kind of success people keep claiming is inevitable. Google is an ideal company to help with this.

An interesting point that Mr. Maher made was the fact that search is very different on the mobile. The mobile web is not nearly as well-linked as the regular web, so Google is struggling with finding all of the content that's out there so people can search it.

Other attendees raised questions about how people are actually going to "discover" mobile services. Very few people whip out their phone and go to Google to find things the way we do on the regular web. The operator portals can be a major source of traffic, but the most popular is the old fashioned texting a keyword to a shortcode approach. I believe that mixing non-mobile and mobile is the key, both for this discovery/marketing process and for most applications. There was some discussion on the floor about mobilized adwords and adsense, but I think there's a lot of mileage to be gotten out of using normal Google Adwords to drive people to mobile applications.

Margaret Gold presented Luup, which is Yet Another Payment Scheme (my term, not hers), basically a mobile-oriented Paypal. She used a new-fangled presentation style, rapid-fire slides with just a word or two or a picture, which was pretty cool. But when someone asked why Luup will succeed where others have failed, especially given that Paypal can easily move into mobile, her answer was pretty weak, basically saying there's room for more than one. The Network Effect suggests that there probably isn't room for more than one, and Paypal already has a massive head start. I don't think being the first into mobile will matter.

One thing a lot of mobile dotcom wannabees don't appreciate is that mobile is not an entirely new playground, it's just an extension of the web. There's a parallel here with the original dotcom bubble, where entrepreneurs thought the web was an entirely new economy, separate from the old one. It turned out to be just another facet of the old economy.

Jeremy Flyn from Vodafone talked about xPay, which sounds like a set of standards which is trying to pick up the pieces left from the crash of SimPay. One of the reasons SimPay failed was that it used a single model across Europe, but different European countries have very different economics for mobile content, including how much they pay out. Flyn repeatedly emphasized that the UK has the highest payout to content providers for premium SMS messages. So xPay is a UK-specific standard, which the operators and SMS aggregators will hopefully all sign onto.

Richard Watney from Reporo gave a fairly brief demo, using a phone, of their service, which basically seems to be a custom J2ME shopping applicaiton. Users browse shops that have signed up with Reporo, and Reporo stores credit card details and uses them to charge purchases.

So the talks were fairly interesting, although in a lot of ways there didn't seem to be anything very new. I think this demonstrates that online mobile services, although it's becoming very hot at the moment, is still struggling to find it's place in peoples' everyday life. I'd say we're basically at a similar stage to the 1996 Web, where very few people were actually making money outside of porn and ripoffs, and it's still difficult to make an unshakable argument that it will become a real, profitable, mature market. Personally, that's what makes it fun to me, just like then, it's uncharted territory.

Friday, March 09, 2007

Multichannel Merchant on Alternate Payment Systems

Resource Guide: Alternate Payment Systems

Mar 1, 2007 12:00 PM , By William Atkinson

Merchants operating businesses through the mid-1960s were in the habit of receiving two types of payments from customers: cash and checks. From the mid-1960s through the mid-1990s, more and more customers began replacing cash and checks with credit-card payments. Now, in the 2000s, merchants and customers have a plethora of payment options, conveniently termed alternative payment systems (APSs).

According to research conducted by Celent Communications, a financial services IT consulting firm in San Mateo, CA, credit- and debit-card payments, which accounted for 90% of online payments in 2000, will account for fewer than 50% by 2009. The reason: the increase in APSs.

While brick-and-mortar retailers are becoming involved with APSs to some degree, it is really direct marketers that are leading the charge — or rather, the move away from the charge. Partly it's to win over consumers who remain concerned about online security and thus are reluctant to pay for Web purchases via credit card. But there's also the fact that most APS transactions are less expensive for the merchant than credit-card transactions.

“There is quite a bit of allure for merchants and customers, and I don't see this trend tapering off,” observes Jeffrey Burke, senior product manager for CyberSource Corp., a Mountain View, CA-based provider of electronic-payment and risk-management services. “In fact, I see the market bringing on more and more types of alternative payments as time goes on.”

Marwan Forzley, president/CEO of Wayne, PA-based MODASolutions, which provides an APS called Secure-eBill, agrees. “If you go into a retail store, you can pay by cash, check, credit card, or debit card. However, if you go on that same retailer's Website, you can probably pay only by credit card.” For direct marketers to set themselves apart from the online competition and to compete with offline merchants, they need to offer more payment options.


Some examples of types of APSs are electronic check processing, debit cards, third-party deferred billing options (such as Bill Me Later), wire services (such as Western Union's Speedpay), installment plans, and stored-payment options (such as PayPal and the relatively new Google Checkout). But categorizing the various options can be incredibly difficult. For one thing, numerous providers offer multiple services in a number of categories. For another, many providers offer services that seem to straddle two or more categories.

Pascal Burg, a director with Atlanta-based financial services consultancy Edgar, Dunn & Co., offered three categories of APSs:

  • Pull payments

    An example is an automatic clearinghouse (ACH) electronic funds transfer that is initiated by the merchant, enabling the merchant to pull funds from the customer's account via an electronic check. Banks, the traditional providers of credit and debit cards, are working hard to stay abreast of options in this category.

    For example, U.S. banks are working on the NACHA Online Payments Pilot, where buyers would be able to send payments to retailers from their Internet banking facility, Burg says. NACHA is a nonprofit organization representing financial institutions and others involved in electronic payment processing.

    Joel Van Arsdale, senior consultant/director of research for First Annapolis Consulting, a Linthicum, MD-based payment products consultancy, also sees the growth of bank involvement. “Merchants are exploring ACH payments, which take the form of e-checks, and other ways to debit from bank accounts,” he says. “Merchants like this because these transactions are quite a bit less expensive that some other forms of payments, especially credit cards.”

    Secure-eBill is one such option. Consumers who pay via Secure-eBill receive an e-mail invoice confirming their purchase, then pays online through their bank, just as they might pay their utility bills. Once the merchant receives the payment, it ships the merchandise. Secure-eBill, which doesn't store any financial information from the consumers, minimizes the risk of hacking. “The only information customers need to disclose to merchants are their e-mail addresses,” says MODASolution's Forzley.

    Merchants that accept Secure-eBill payments pay MODASolutions 1%-1.5% of the value of each transaction, depending on their volume; there are no set-up fees. In comparison, credit-card processing fees generally range from 1.7% to 3.5% of the value of each transaction. Because the consumer moves funds from his bank to the merchant's bank, these are considered “good funds,” and there are no chargebacks.

  • Push payments

    These are fund transfers initiated by the buyer to the merchant. Wire services are an example. Say a customer wants to pay for an online purchase via Western Union. He'll complete his order and receive a reference number from the merchant. He then generally has up to 48 hours to go to a Western Union branch and pay cash; Western Union subsequently informs the merchant that payment has been made, and the merchant ships out the merchandise. This is a very low-cost — sometimes even free — transaction for the merchant, as the customer is the one who pays a fee to Western Union.

  • New payment options

    This is pretty much a catch-all category for APSs that are neither true pull or push payment options and for new players that are unaffiliated with traditional providers. “There aren't many providers in this category,” Burg says, “because it takes time to build a lot of awareness among merchants and customers.”

Three of the most popular methods in this category are PayPal, Google Checkout, and Bill Me Later.

PayPal has more than 100 million accounts worldwide and represents about 10% of U.S. online sales volume. Merchant fees start at $0.30 per transaction plus 2.9% of the total payment.

The original PayPal model is akin to a pull-payment method. A consumer signs up online for a PayPal account, providing a credit-card number and/or his online banking data. PayPal keeps this information and does not share it with the merchants. When the consumer makes a purchase from a merchant and wants to use PayPal, he clicks on PayPal on the merchant's site, enters his user name and password, and authorizes PayPal to transfer the funds from the credit-card or bank account he linked to PayPal to the merchant's PayPal account. The merchant can then keep the money in its own PayPal account to pay its own vendors or transfer the funds to its own bank account, among other options.

PayPal also recently rolled out a virtual debit card, software that consumers can download that generates a one-time MasterCard debit account number for use at e-commerce sites that accept MasterCard but not PayPal. As part of its battle with Google Checkout for market dominance, PayPal isn't charging merchants to handle these transactions.

“PayPal has a two-pronged pitch to the merchant community,” explains First Annapolis's Van Arsdale. “On the one hand, there is the potential for cost savings, since PayPal has the ability to drive down its cost in the future by emphasizing other forms of payment beyond credit cards.” And because it already has so many consumer account holders, it can make a strong case to merchants that it is on the way to becoming a standard online payment method.

One potential concern for merchants and consumers alike, though, according to CyberSource's Burke, is that PayPal is both the issuer and the acquirer. “As such, there have been some concerns about their objectivity as they mediate disputes between buyers and sellers,” he cautions.

“Google Checkout is similar to what the early stages of PayPal was,” says Van Arsdale. “It is targeting small, Web-oriented businesses, and it is more of an acquiring option for micro-businesses.” Consumers provide Google with their credit-card and shipping information, which Google stores. The system currently supports credit cards from Visa, MasterCard, American Express, and Discover but not bank-account transfers. Users then purchase goods and services at participating merchants without having to share credit-card information with those merchants. Google charges merchants $0.20 per transaction plus 2% of the transaction value.

One advantage Google Checkout has is that it is a recognizable brand. “However, one advantage of other services such as PayPal is that they have a funding mix, allowing payments through credit cards, payments from other PayPal accounts, and ACH transfers to a bank account,” Van Arsdale says.

Burg adds that, because it is so new, Google Checkout has limited traction so far, but it is already “top of mind.” “It may take awhile before it gains traction,” he notes.

Bill Me Later's pitch to merchants is similar to that of PayPal, in that it has the ability to drive down merchant costs and appeals to a community of shoppers who prefer not to use a credit card online. Its merchant fee is 1.5% of the transaction value.

For consumers, Bill Me Later is similar to applying for a line of credit. Once the customer decides what he wants to buy, he provides his name, the last four digits of his Social Security number, and his date of birth. Bill Me Later then does an instant credit review and decides whether it wants to loan that amount of money to the customer. If it approves the credit, the customer gets a statement from Bill Me Later. The customer can pay the amount off all at once or pay over a period of time. If he pays over time, he also pays interest.


The good news about APSs is that the technology is well ahead of merchant demand at this time. Another bright spot is that there are dozens of providers from which to select.

This, however, can also be a downside, as it makes the narrowing-down process that much more difficult. In addition, there have been a lot of false starts, and a number of providers have already folded or merged with other providers. And not just small, “upstart” providers: Some large companies that entered this market have already abandoned the field. For example, Microsoft scratched plans to turn Passport into a payment service, and Yahoo! gave up on PayDirect Network in 2004.

As such, when considering providers, look for a healthy track record, a strong share of market, and general popularity among consumers. Here are some other tips for selecting an APS provider:

  • Anytime you add a new payment system, you will have to make some investment of money and time, such as technical upgrades and reprogramming of your Website. “I don't recommend jumping into each and every alternative payment system that comes along simply because it exists, because there is some track record of failure for this type of product,” notes First Annapolis's Van Arsdale. “Look for the ones that have attained a certain level of attraction, then experiment with them. Offer them, and see how your customers react.” He also suggests collecting data and feedback from customers to determine the impact.

  • “Find out what your three or four major direct competitors offer,” says Burg. At a minimum, you should offer as much as your competitors. Then consider adding one or two forms of payment that your competitors don't offer in order to differentiate yourself.

  • But start out slowly. To assess cost-effectiveness, introduce one alternative payment system and see if it leads to incremental business. “If so, consider adding another,” Burg suggests.

  • Besides going to each APS provider's Website for information, it may be worthwhile searching online for the provider's name to see how many hits show up. While not a scientific study of popularity, it can help you narrow down the list.

  • “Find out what your customers are asking for,” advises Joan Broughton, vice president, content and education for the division of the National Retail Federation. “Then ask the providers who else is using their technology. Contact those merchants to see what their experience has been with it.”

  • Focus on providers that either have a lot of positive and extensive press already or are actively working to promote their services to consumers. It is not your responsibility as a merchant to publicize an APS or how it operates; it's the provider's responsibility, says CyberSource spokesperson Bruce Frymire.

    “Merchants have a certain amount of real estate available to them on their Websites and a certain amount of time in front of the consumer,” Frymire says. “If it were their responsibility to educate customers on the various payment methods, it would direct attention away from where it should be, which is on making the sale.”

  • If you have a lot of international customers, it may make sense to accept wire transfers, as well as PayPal, which is worldwide.

  • “One claim many of these services make is that your cost will be lower than that of credit-card transactions,” notes CyberSource's Burke. “Read the fine print to make sure this is the case. Also, make sure you will get your money as quickly as you would with a credit-card payment.”

Having your own merchant account, as with a credit card set-up, increases the flow of funds to your bank. While the account provider will hold your funds to prevent chargebacks, it's usually only for about 48 hours. With an APS provider, however, you may need to wait for a week before you receive your funds.

“How many payment methods are enough?”

According to research conducted by CyberSource Corp., a systems integrator that provides electronic-payment and risk-management services

  • 59% of its clients support one or two alternative payment system options;
  • 30% support three or four options; and
  • 1% support five or more options.

What is the ideal number to have? There is no easy answer.

“If have too many options, it can become very costly,” says Joel Van Arsdale, senior consultant/director of research for First Annapolis Consulting, a payment products consulting firm. “In addition, it can become confusing for the customer.”

Pascal Burg, a director with Edgar, Dunn & Co., a financial services consulting firm, agrees. “You don't want to confuse customers at the checkout stage, so you don't want to offer too many. In addition to credit cards, you probably only want to accept two or three more services.”

But CyberSource senior product manager Jeffrey Burke says that according to the company's research, merchant that offered at least three alternative payment methods had a 14% higher sales conversion rate than those that offered only one or two. — WA

A sampling of APS providers

It is virtually impossible to decisively categorize APS providers, because some of them offer a wide range of services that cut across a number of categories. In addition, some of the services seem to straddle two or more categories.

It is also difficult to organize providers by size, because that changes monthly. Some of these providers may not even be in existence anymore in a month. Others may have merged with larger providers. Still others may increase market share quickly in the near future (as Google Checkout is expected to do).

As such, providers here are listed alphabetically.












PAYPASS (division of MasterCard)






SPEEDPAY (Western Union)


TEMPO PAYMENTS (formerly Debitman)





“Why we added two APSs”

Computer and electronics merchant accepts payment via Secure-eBill as well as by PayPal. “We introduced two alternative payment systems for a number of reasons,” says vice president of sales Patrick Fiorentino.

“First, customers are looking for alternative ways to make payments. There is a big trend toward people wanting to remain third-party to their payment information. They don't want to give credit-card information or do direct transfers to vendors. They want to go through a third-party that they believe will hold that information secure.

“Second, customers want to pay in a number of ways. If you don't offer these permutations, they won't do business with you.

“Third, we prefer customers to go this direction because of the financial benefit we receive by using these services, compared to credit-card charges.

“Fourth, our risk-analysis department consists of 40 people who spend their time reviewing and analyzing credit-card payments to determine whether to accept them or not. However, credit cards represent only 14% of our total transactions.

“When we introduced PayPal two years ago, we wondered how many people would actually use it. We were surprised to find that that business doubled year over year. And since introducing Secure-eBill, we have seen the numbers go up every month.” on Mobile Ticketing

Mobile ticketing gets groovy in club trial

'If your name's not on the phone, you're not coming in'

By Gemma Simpson

Published: Wednesday 29 November 2006

London club Minstry of Sound has completed a live trial of end-to-end mobile ticketing that saw clubbers able to buy, receive and redeem tickets on their phones.

The clubbers, who must be registered PayPal users, started the process by sending a text to a number designated by the Minstry of Sound. This activated an interactive voice-response callback which confirmed the ticket request by asking the caller to authenticate their PayPal PIN. Once confirmed, a mobile ticket was delivered to the handset in the form of a text message.

Cheat Sheets

Mobile location-based services

The text 'ticket' contained another PIN number which was verified at the nightclub's doors when revellers turned up to a student night at the London club.

Felicity Ive, head of strategic brand partnerships at the Ministry of Sound, told consumers were receptive to the mobile tickets and said "we will be looking to use mobile ticketing in the future".

The next step would be to use barcode mobile ticketing, in which an electronic barcode is sent to the ticket buyer's mobile phone via text message. This method is quicker to process when clubgoers arrive at the venue, requiring just a scan of the mobile phone as opposed to manually entering a PIN number, Ive added.

Around 1,100 people came through the club doors on the night of the trial, with roughly 10 per cent using the mobile ticketing service.

High-tech ticketing methods are popping up in a wide variety of venues with Fulham FC issuing RFID football tickets, the Eden Project adopting mobile queue jumping and Chiltern Railways trialling mobile train tickets .

Firethorn - Payments News

A First Look At Firethorn Mobile

Earlier this month, Firethorn announced a partnership with CheckFree to deliver mobile banking and bill payment services to financial institutions. Subsequently, Firethorn announced it was teaming with Cingular Wireless for its service and announced Synovus as its initial financial institution customer. In this article, we take a quick look at Firethorn's new mobile banking service based on the information on the company's web site and from its press releases.

Importantly, Firethorn's immediate focus isn't on mobile payments but, rather, on mobile banking. Firethorn says it is seeking to play the role of an intermediary service provider between financial institutions and wireless carriers - saying its "unique federation strategy links financial institutions to wireless carriers through a unified, secure and scalable technology platform that seamlessly extends full-service banking and payments capabilities to a consumer's mobile phone or other wireless device." Firethorn says it's different from others "because its federation strategy represents wireless carriers and financial institutions independently and equally."

Firethorn's approach isn't SMS-based but, rather, is based upon a secure application that is downloaded into the user's mobile handset. The challenges of developing and supporting an application like this acrossthe wide variety of handsets, carriers, etc. almost demand a company like Firethorn acting as the intermediary for developing and, importantly, supporting that application.

Via that application, in combination with a user's account data from the financial institution partner, users can perform several functions including viewing real-time financial account balances, conduct intra-bank transfers between accounts, have electronic bill presented, pay those bills electronically from the handset, and "clear contents quickly and easily in the event of loss."

Firethorn's initial partnerships with CheckFree, Cingular, and Synovus are certainly impressive. Founder and CEO Tripp Rackley previously built nFront, an online banking solutions provider that was acquired by Digital Insight. Rackley's recruited an impressive board of directors with experience in both telecommunications and payments - including Global Payments CEO Paul Garcia. We'll be watching this company for further developments as it pursues its federation strategy.

BankTech Magazine on Mobile Banking

The Handheld Bank

Dec 01, 2006

In the battle to stay connected with consumers, banks have leveraged technology advances to develop and enhance distribution channels, from ATMs to interactive voice response systems and even online banking. Now, financial institutions are tapping the potential of wireless networks and mobile devices to serve their customers. As a result, these solutions are helping banks to deliver critical account information and strengthen customer relationships. >>

According to Oyster Bay, N.Y.-based ABI Research, 245 million mobile devices shipped in the third quarter of 2006. And the telecommunications technology research firm reports that the global mobile devices marketplace is on target to reach 1 billion units by year-end. Realizing that almost every banking customer uses some sort of mobile device, financial institutions are rethinking how to exploit these units and wireless networks to foster more customer interaction.

While early mobile solutions caught the attention of financial services firms over the past five years, the "technology just was not ready," says Paul Race, director of innovation marketing for Dayton, Ohio-based ATM manufacturer NCR. Race tests emerging technologies at NCR's Global Research Center for Research and Development for Self-Service Business in Dundee, Scotland. "As we start to emerge from the stage of disillusionment, technology is getting more robust, bandwidth is stronger and customers are more accepting," he says. Like any emerging technology, however, "wireless solutions will only work if consumers see their benefits and adopt them," Race adds.

As statistics prove, few individuals leave home without a cell phone, PDA (personal digital assistant) or other personal wireless communications device. And as more customers rely on mobile devices, it is not surprising that they are managing more daily tasks while on the run. "Mobility is increasingly important in people's daily lives, and these 'mobile' people expect to incorporate the management of their finances into this lifestyle," says Frank Georgi, global lead, CRM financial services, Internet and mobility practice for Accenture in Munich.

That said, banks are in the hot seat as more of their customers are requesting mobile banking services. The trend is so strong in Europe that "research indicates that 25 percent of all U.K.-based banking customers would be willing to switch to another bank if it offered them a comprehensive mobile banking service for free," Georgi reports.

But consumer demand is not the only driver behind the mobility trend in banking. Mobile solutions are expanding internal opportunities for banks as well. "Rather than invest thousands of dollars into stationary PCs, banks can expand the power of their enterprise by leveraging existing wireless networks," asserts Richard Rushing, chief security officer for AirDefense, an Alpharetta, Ga.-based provider of wireless network security solutions.

And wireless applications seemingly are endless. They can empower the workforce, or service customers both inside and outside of the branch. More important, wireless and mobile applications enable banks to create a new marketing channel and extend their brand in new ways. "They allow banks to differentiate themselves in the marketplace and offer their customers more freedom and flexibility," Accenture's Georgi says.

Thus, banks are partnering with technology vendors and delivering more applications via mobile solutions. "The key is to create a two-way channel [wherein] users can deliver and access information in a secure way," says Joe Salesky, CEO of mobile messaging solutions provider ClairMail (Novato, Calif.).

Unleashing the Power of Mobility

The easiest way for banks to whet their appetites for mobile applications is to untether their workforces -- a task that is becoming more important as more associates become mobile, according to Ed Martino, director, finance industry, Sprint. "The number of employees working outside of the office in mobile locations has increased dramatically over the last couple of years," he relates. "Enterprises need a way for these associates to remotely reach into the back office and access databases and mission-critical information," he adds. "Thanks to wireless-enabled laptops and consumer handheld devices, employees can conduct business from a hotel, home or a remote office."

Chicago-based Northern Trust ($52.6 billion in total assets) is no stranger to the mobile workforce. Whether conducting perspective sales or servicing existing clients, Northern Trust's relationship management associates are never far from their BlackBerrys or other handheld devices.

"All PDAs are password-protected and hooked to our server," says Diane Spradlin, the bank's senior vice president and director of enterprise relationship management. "These units keep associates connected to their calendars and e-mail, and deliver information to their fingertips," she adds. "They can also access details about customers rather than carry reams of paper files."

Northern Trust's internal and customer portals are getting renewed attention thanks to wireless networks. "Northern Trust's internal portal provides sales and client servicing partners the capability to access client and prospect information by bringing up a real-time view of the customer," says Deb Dworman, VP, Northern Trust.

And mobile solutions can boost profitability for banks. "Customers are no longer forced to make a trip into the bank," explains Sprint's Martino. "By allowing associates to go to the customer, wireless networks and mobile devices are a catalyst for profit growth."

Loan officers, for example, no longer are tethered to their desks in a branch. "With 220,000 loan officers available in the industry today, they need access to data while on the road," says Shane Hughes, cofounder, president and CEO of Waltham, Mass.-based Pyxis Mobile, a wireless software provider.

While meeting with customers in their offices or homes, for example, loan officers can use wireless laptops and printers for loan origination. "They have access to customer information and can deliver a quote on the spot, enabling customers to make an investment decision," Sprint's Martino says.

Building Customer Relationships

Mobile solutions also have merit for banks as they connect with customers in-branch. Whether they use a kiosk, wireless tablet or a handheld device, "Mobile solutions enable banks to serve more customers," says AirDefense's Rushing. "They can process a transaction as customers wait in line, enroll them in new accounts or cross-sell new products."

According to Northern Trust's Spradlin, the bank currently is exploring how to apply mobile solutions to cross-selling efforts. Northern Trust, which has been supporting a customer relationship management (CRM) program for approximately eight years, will launch the first release of an enterprise relationship management (ERM) tool in November. Spradlin says her goal is to eventually enable users to access data via mobile devices, but she declines to specify a rollout date.

"One of our distinctions is that we do not force our clients to visit us -- we go to them," explains Northern Trust's Dworman, who is leading the project. Since it's crucial for the bank's remote relationship management executives and sales staff to be on the road and in front of clients, "We need to keep them connected to all client data available in our enterprise systems."

New York-based Citigroup ($83.6 billion in assets) also is bullish on employing technology to expand customer relationships. "Besides interacting with customers at ATMs, call centers, branches and through the Internet, we are also testing mobile solutions," Richard Naddy, SVP, North America decision management, Citigroup, said during the SAS user conference, "BetterManagement Live!," held in Las Vegas in October. "We are committed to focusing on how to connect with customers across all distribution points," he added. "Mobile technology is part of this strategy." Naddy declined to discuss specific projects during the session.

One popular mobile application that offers enormous potential for relationship building is SMS (short message service) text messaging services. In 2005, an average of 5 billion text messages were sent a month in the United States, up from 2.8 billion in 2004, according to the wireless trade association CTIA.

"Text messaging is a $35 billion-a-year business," explains ClairMail's Salesky. "Text messaging is a natural way to invoke two-way communication with customers."

For example, banks can use text to deliver actionable alerts to their mobile customers. These may indicate a low balance, seek to verify a transaction, deliver a cross-selling opportunity or even supply special dial-in information for the contact center.

"The mobile phone can strengthen the abilities of agents at the contact center," says Accenture's Georgi. "The combination of a person in the contact center and the mobile device opens up the next level in terms of contact center services," he adds. "Texting becomes a means for the customer to connect with you rather than call in and wait on hold."

According to ClairMail's Salesky, if a bank is outfitted with the vendor's solution, for example, the customer can text the bank, and ClairMail's system puts that person in the call queue. "Then we text the customer with a message alerting them with a time and number to dial into," Salesky says. "Being on hold never benefits anyone. Texting is a means of connecting the bank more easily and getting better customer service."

Better Safe Than Sorry

Before banks can make any mobile opportunities a reality, however, they need to be mindful of security. Clearly, banks are comfortable with traditional configurations, in which PCs are wired and plugged into networks via Ethernet cables. "Banks can see where the computer is plugged in and detect where the firewalls and other layers of security are," explains AirDefense's Rushing. "But with wireless, all bets are off."

In fact, a lack of security is a surefire way to kill any wireless project. "Customers will only adopt [wireless applications] if they trust their bank, and if applications are treated and maintained responsibly," NCR's Race asserts.

While wireless networks are not yet 100 percent secure, there is hope on the horizon. "The encryption problem has been solved, but due to the nature of wireless, users are still able to mimic and piggyback onto networks over the air," AirDefense's Rushing says. "Until this is resolved, banks need to monitor what is going on and who is doing what functions."

Despite some security concerns, however, new mobile banking applications already are emerging. While total mobile banking remains a theory for the time being, the first step toward achieving that nirvana may be through contactless payments. Supported by a contactless smart card or NCF (Near Field Communication) chip embedded in a mobile device, customers may gain a new way to access ATMs, pay for purchases or make electronic deposits. An NFC chip encrypts credit card or bank account information; then, using short-distance radio waves, transmits data to a receiver that can reside in a point-of-sale payment terminal, an ATM or a kiosk. Since the chip is considered two-way technology, the unit also can receive other data, such as receipts or coupons.

"The concept also holds the opportunity to mitigate payment card skimming and fraud," NCR's Race points out. "By removing the mag stripe from the equation, consumers no longer need to insert a card into an ATM slot. This eliminates the chance of embedded data being skimmed or cloned."

Looking ahead, banks may choose to outfit entrance doors with electronic sensors that detect these chips. "This will alert associates to when a valued customer enters the branch," Race says.

While European markets already are testing various contactless banking applications, the domestic market may soon follow suit, according to Race. NFC chips will gain traction during 2007 and 2008, paving the way for these solutions, he contends.

While U.S.-based banks are hopeful, they do remain cautious. "Banks overseas are testing mobile payment alternatives, and they clearly provide an opportunity," said Richard Martino, senior vice president, U.S. Bank (Minneapolis; $217 billion in total assets), at the "BetterManagement LIVE!" conference. "However, it will happen over time," he added.

Daniel Thorpe, senior vice president with Charlotte, N.C.-based Wachovia ($700 billion in assets), agreed. "Europe is ahead in this arena, and from a business level, they are more comfortable with the technology," he told show attendees. "To gain critical mass here, the industry needs to ensure security [for users]."

Security issues aside, banks also are at the mercy of another factor. "The mobile phone industry will enable and drive these solutions, as they own the underlying and supporting technology -- not the banks," concludes Thomas Spitzer, president and CEO of Tyfone, a Portland, Ore.-based provider of applications for mobile phones. **

Consumer Report on Virtual Wallets

Illustration of computer
Illustration by Bob Eckstein

Uneasy about spreading your credit-card number around the Internet as you go about your holiday shopping? Several services, including PayPal and Bill Me Later, can offer added security in an electronic world vulnerable to credit-card fraud and identity theft. But they’re far from foolproof.

The services are convenient. You register just once with each. Then, whenever you buy something from a participating merchant, you merely click on the service’s icon and the transaction speeds through, without your having to retype your personal data. The service pays the merchant by billing your credit card or by dipping into your bank account. For buyers, all the services are free.

Beyond that, each one works a little differently. Here are some basic types:

Auction payment services. To pay for auction winnings or to deal with a small retailer, most likely you’ll use PayPal, BidPay, or a similar payment service. PayPal bills your credit card or withdraws the money from your bank or out of your PayPal cash account.

Checkout services. Google Checkout is the newest, but individual retailers like Amazon have long offered express check­out. When you click on an icon, your purchase is billed to your credit card. Google search results now show a shopping cart under a company’s name if the retailer participates.

Credit accounts. Bill Me Later instantly checks your credit worthiness after requesting the last four digits of your Social Security number, your address, and birth date. The service sends the first bill by mail, but you can pay subsequent bills electronically. As with credit cards, you’re subject to late fees and interest charges, currently 18 percent.

Buyer beware

If you use a credit card for purchases through any of the payment services, you get the same protections as if you paid with your card directly.

But using a bank or cash account for online purchases is riskier. Federal law entitles you to a credit for returns, damaged goods, and missing shipments bought with a credit card. It also limits your liability for fraudulent charges to $50. Those protections don’t apply if you pay from a bank or cash account. You’ll have to haggle with the bank or payment service for redress.

Online payment services promise some protections, but they’re not required by law and could change. Bill Me Later says customers aren’t responsible for any fraudulent charge. If there’s a dispute, PayPal will cover a buyer for up to $1,000 if buyer and seller can’t reach agreement through its resolution program. But you’re out of luck if you bought more than $1,000 worth of stuff.

(Last fall, without admitting to any wrong­doing, PayPal agreed in a settlement to pay $1.7 million to 28 states. It also announced a separate proposed settlement for $3.5 million in a class action that found the company hadn’t adequately disclosed its policies to customers. One problem: Customers with more than one account on file didn’t always realize their bank account rather than their credit card would be tapped first for purchases. Now PayPal must conspicuously disclose that policy.

Before signing up for any of the services, heed this advice:

  • Use a credit card to make payments to the services. You’ll have more protection.

  • Never click on links in e-mail that appears to be from payment services, especially if it asks for confidential information. And don’t reply. If you do, you might become a victim of phishing, a scam designed to cull sensitive personal data.

  • Look for a lock icon at the bottom of a company’s Web site page, indicating that it has been encrypted.

  • With the Verified by Visa or MasterCard SecureCode programs, you can skip the payment services and use your credit card online with an added password protection. (See the companies’ Web sites for details.)

You can go cardless

Online shoppers have many electronic options for paying. The services below are three of the larger players. PayPal and Google require you to sign up at their Web sites. You can register at Bill Me Later when you’re ready to make your purchase. All have been vetted for credibility and trust by Consumer WebWatch, a project of Consumers Union, nonprofit publisher of this magazine.

Service Major online merchant partners
Bill Me Later Wal-Mart, eCost, Dick's Sporting Goods, Bluefly, Overstock, KB Toys, Cabela's, TigerDirect, American Girl,
Google Checkout uBid,, Bluefly, eCost, Ritz-Camera, Starbucks, Dick's Sporting Goods, Timberland
PayPal eBay, Dell,, Hotwire, iTunes, TigerDirect, Starbucks, Skype, Ritz Camera, H&R Block,

Creating Wealth from Payments Innovation - Payments News

Creating Wealth from Innovation

One of our research initiatives at Glenbrook this fall has been exploring innovation in electronic payments - how payments innovations happen, the characteristics of the most important drivers of them (including the impacts of key people, industry structure, and any important technologies) that enable innovations, and how to best measure and define their success.

One way to measure success - a measure that's naturally of particular interest to investors in payments companies - is whether and how wealth has been created as a result of the innovation. Looking back at wealth creation in payments over the last several years, there are really only a couple of truly standout US examples: PayPal (before its acquisition by eBay) and MasterCard (with one of the most successful initial public offerings this year).

PayPal's innovation was using a classic Clayton Christensen "entry from below" strategy - to provide payment services to individuals and small merchants who might not otherwise have been able to qualify for a bankcard merchant account with a traditional merchant acquirer. MasterCard's wealth creation wasn't the result of innovation in markets or technologies - but, rather, innovation in governance and, curiously, ownership.

In thinking about innovation in payments, it's striking that while there's been a lot of talk about the high costs of merchant card acceptance, etc., there's been no successful emergence to date of a "low price" payments player. Where's the Wal-Mart or Southwest Airlines of payments? Where's the Dell, the Ikea, even the ING Direct of payments? How about the Intuit of payments - radically changing the economics of payments in the same way that Intuit completely changed the ecosystem of tax preparation? Will Prosper and Zopa emerge as stunning examples of revolutionary changes in consumer lending that displace banks - or end up just being "science fair" experiments?

This month's Harvard Business Review has an article titled "Strategies to Fight Low-Cost Rivals" by Nirmalya Kumar, a professor of marketing at the London Business School. It's one of the best articles I've read about how incumbents need to think about the potential emergence of low-cost rivals. I enjoyed the following commentary from Kumar's article:

Many price warriors don’t figure in listings of the biggest companies, but they have created wealth—and pots of it. Look at Forbes’s list of the world’s richest people in 2006, for instance, and you will discover that 12 of the top 25 billionaires made their fortunes by creating (or inheriting) low-cost businesses. They include Sam Walton’s five heirs, whose combined net worth was estimated at $80 billion, Aldi’s Theo and Karl Albrecht with $32 billion, IKEA’s Ingvar Kamprad with $28 billion, Mittal Steel’s Lakshmi Mittal with $23.5 billion, Dell’s Michael Dell with $17 billion, Zara’s Amancio Ortega with $14.8 billion, and Wipro’s Azim Premji with $13 billion.
So, where is the first new payments billionaire of this century going to come from?

Thursday, March 08, 2007

Bango's summary of Payforit

Mandatory Payforit compliance in UK coming soon: Protect your business

Traditional text message driven mobile content sales are in decline. The big growth is now in browse and buy, WAP based, content sales.

Payforit logoTo ensure customer protection as they drive this new model forward, the UK mobile operators are mandating Payforit compliance if you want to offer your content through a mobile web experience.

To meet their requirements, and benefit from the transition to the internet model, you must...

  • Design your mobile content service to work with and without the user's phone number being provided to you.
  • Select a Payforit accredited intermediary to collect payments on your behalf.

If you don't take these steps, your mobile content business is at serious risk. Mandatory Payforit compliance starts as early as 1st June 2007.

Payforit for WAP billing in the UK

What is Payforit?

Payforit is a UK cross-mobile operator initiative to promote a safe and trustworthy environment for mobile phone users to purchase goods and services on the mobile web and charge to their mobile phone. It aims to improve the consumer experience for one-time and subscription based services by introducing a safe, transparent and unified approach to mobile purchases.

Payforit applies to the following:
  • One-off payments
  • Refunds
  • Subscription set-up
  • MSISDN pass through
  • Subscription payments
  • Customer care
  • Subscription management
  • Audit tracking

Payforit compliance will be automatically implemented as required by the UK operators within the Bango WAP based payment flow. You don't need to change anything in your mobile website.

Earlier in 2007, Bango organized and hosted a very successful session where 35 leading content providers met with the 5 UK operators to discuss Payforit and the way ahead. O2 announced their intent to mandate Payforit for "WAP billing" flows from June 2007. Each operator may add its own implementation requirements, and the scheme rules are likely to evolve over time as they each learn more about the different models.

We are ready to activate Payforit the moment it becomes mandatory.

Sunday, March 04, 2007

LUUP powers Amnesty International donations

Amnesty offers new donation method

Source: | Published: 01 March 2007 00:00

Amnesty International is to launch a mobile phone donations service powered by LUUP, a mobile payment technology developed by Norwegian specialist Contopronto.

LUUP allows people to donate up to £800, and provides charities with more of the proceeds than traditional premium SMS channels. ...

Thursday, March 01, 2007

ZDnet covers Obopay

Social money on your cell: Citi mobilizes financial transactions

Posted by Donna Bogatin @ 11:02 am

Do you want to Obopay?

The mobile person-to-person payment service platform is betting you do, touting a “fast and easy way to make payments using mobile phones.”

Citigroup also believes in the potential of Obopay’s “Social Money” solution. Citi financial services company is gearing up to launch a Obopay-powered real-time, person-to-person mobile payments service for Citi credit and debit card customers to:

Easily and securely send and receive money instantly via any mobile phone. Remotely track and manage mobile payment accounts by checking balances, viewing payment histories, and adding funds directly from their mobile phone. Funds received via the Citi-Obopay Mobile Person-to-Person service can also be accessed with a debit card provided with the service.

Carol Realini, Obopay Founder and CEO:

We are making it easier for consumers to instantly send, spend and get cash when its needed most.

"Get Money, Send Money, Spend Money" are the mottos of Obopay, all via any mobile phone, the fun and social way!

Realini underscores Obopay is not just about enabling access to money on the go, it is about empowering “social money” experiences:

For a society that pays so much for convenience, it’s ironic how inconvenient money itself has become. We’re making money convenient again with new social money services.

Obopay describes “social money” as the money that passes between people when they engage in shared consumer experiences, such as:

Roomates spliting living expenses (rent, utilities…)
Travelers sharing a hotel room,
Co-workers pooling money for an office gift
Friends dining together…

Obopay believes that as friends, family and co-workers do more things together, there can be confusion and conflict over who owes what. Obopay to the resuce: “Obopay’s social money services remove the tension.”

How? Obopay promises “All you need is a mobile phone and your friend’s mobile phone number, Whether you choose to use Obopay via text messaging, your phone's Internet browser or download Obopay onto your phone.” Obopay also promises a $5 prepaid MasterCard start-up bonus.


Obay uses a prepaid debit model in which users add money to their Obopay accounts in advance of purchases. Money may be added to an Obopay account through: Obopay merchant locations, Interactive Voice Response, Obopay website (, and customer service representative. Account holders then have access to these funds through their mobile phones to make and receive payments, and check account activity. As a software solution, Obopay only requires users to have a mobile phone and Obopay account. There is no additional hardware or Internet access required.

An Obopay account is created through the Website or customer service center. One registered, a unique PIN is given to the user to verify all transactions. Upon registering, the account holder enters their mobile phone number to have the Obopay Mobile Application pushed to their phone. Once installed, they can begin using Obopay for their financial transactions.

To users, Obopay transactions are seamless. They simply send a message from their mobile phones to the Obopay server using the application. The server validates the transaction and transfers the funds or responds to the user’s request for account information.

An Obopay account holder can send money to any SMS-enabled handset user, even if they do not have the Obopay application or an Obopay account. The recipient will get a text message indicating that funds have been transferred in their name. To get access to these funds, the recipient will need to register their own Obopay account. Minimal transactions fees apply.


The Obopay Mobile Application is based on the Java 2 Platform, Enterprise Edition (J2EE). Development plans include support for every protocol and every phone operating system.

The Obopay system incorporates security, communication, ledger, currency, fraud, reporting and administration. Incoming and outgoing transaction requests are processed by HTTP or Web Services commands.


Qualcomm is an Obopay strategic partner. Obopay also garnered $10 million in Series A funding a year ago from Redpoint Ventures, Onset Ventures and Richmond Capital, undoubtedly not delivered “social money” style, however.