Wednesday, May 30, 2007

IP Commerce and PayPal Partner

IP Commerce, PayPal Partner

IP Commerce has announced that it will offer payment services powered by PayPal including an email invoicing solution in PASS Commerce Center and a Sales Ticker, as part of the PASS Gadget which can be placed in the Windows Vista sidebar. According to the companies, "small businesses using PASS Commerce Center and services will benefit from improved cash flow, visibility into their financial standing, best practice security measures that reduce fraud and identity theft, and the ability to extend greater flexibility of payment options to their customers."

The new services for small businesses are now available in PASS™ (Payments as a Secure Service™) Commerce Center. The solutions leverage IP Commerce’s IP Payments Framework™, a single platform that provides the framework to enable disparate applications and services to communicate. PayPal’s technology allows small businesses to create and send their customers payment-enabled invoices over email using the PASS Email Invoicing service. The invoices include an encrypted payment button that is embedded into the invoice, allowing small businesses to accept payment through their PayPal accounts. The Sales Ticker allows PayPal small business users to add an active desktop icon that receives and alerts them to incoming PayPal payments in real-time, without the need to login to their PayPal accounts.

“With the help of firms like IP Commerce, small businesses are able to integrate PayPal in new ways to streamline their accounting processes,” said Gene Alston, business development director at PayPal. “We are excited about being part of this powerful team of industry leaders that is educating the market about the benefits of an open payments marketplace.”

“PayPal is a recognized and respected leader in the payments industry and a valued member of the PASS Consortium,” said Chip Kahn, CEO, IP Commerce. “The consortium has been working closely as a team with Microsoft to ensure that we achieve our common goal of developing a truly open network of payment applications that enables small businesses to be more efficient and more aware of all aspects of their business.”

The PASS Consortium, developed by IP Commerce, is a group of leading financial institutions and payment service providers working together to promote secure and efficient open financial transactions within the Windows Vista™ Business operating system. As part of the PASS Consortium’s quest to promote an open payments network, the member organizations’ services are now available via PASS Commerce Center, a comprehensive financial management solution designed to help small businesses using Windows Vista Business succeed. In addition to PayPal, PASS Consortium members include AmbironTrustWave, BankServ, Chase Paymentech, CIT Group, Inc., and Internet Commerce Corporation.

Contactless Technology in the US - Card Technology

Contactless In America: Some Banks Have Yet To Climb Aboard

By Dan Balaban

While the buzz around contactless payment in the United States continues, not everyone is convinced the concept will take off anytime soon, especially when it comes to consumers tapping to pay with their mobile phones.

Among the more skeptical voices is that of John Suchanec, senior vice president of payment technology for giant card issuer Bank of America. The bank’s recent trial of contactless payment using mobile phones that support Near Field Communication failed to inspire, he said. And while the bank plans another NFC trial this summer, Suchanec said he isn’t yet sold on the technology or–for that matter–on contactless payment from other “devices,” including cards and key fobs.

“You’ve really got to provide a place where people will (be able to) pull out a device and use it everyday,” he told Card Technology. You really have to generate a business case to justify it (added cost).”

With rules adopted by the payment card organizations allowing U.S. consumers to make low-value purchases without signing receipts, tapping cards or other tokens to pay is not appreciably faster or more convenient than swiping the cards at the point of sale, said Suchanec. He also spoke last week at the CardTechSecurTech conference in San Francisco.

Bank of America is perhaps the largest but not the only big issuer still sitting on the sidelines when it comes to rolling out contactless cards or tokens. Citibank has largely dabbled in the technology, and Capital One hasn’t taken the plunge. Of the largest banks, only JPMorgan Chase has begun a significant rollout, although it has only put contactless chips on part of its portfolio.

Without more big issuers moving boldly forward on contactless–and none putting chips on all new and replacement cards–vendors predict they will ship only about 25 million contactless cards or fobs this year. That’s up modestly from the roughly 20 million contactless cards or tokens vendors sold in 2006. Contactless backers are targeting the cash-heavy market for purchases of $25 or less.

Bank of America does have some contactless cards on issue, by virtue of its acquisition completed in early 2006 of credit card giant MBNA, which has suited up for contactless payment mainly at American sports stadiums.

On the merchant side, 40,000 or 45,000 locations accept contactless payment in the United States, a growing yet still small percentage of all merchant locations that take card payment.

Some small or mid-tier U.S. banks, such as KeyBank, SunTrust and Wells Fargo, among others, are issuing contactless cards, as is HSBC on a regional basis. The 25 million contactless cards and fobs likely to be issued this year compares with the roughly 300 million credit, debit and prepaid cards U.S. financial institutions will roll out in 2007, nearly all of them simple magnetic-stripe cards. These cost a small fraction of the price of contactless cards, which run about $1.50 apiece in the United States. Issuers in Europe and Asia that have adopted more secure EMV technology for their payment cards would pay at least two to three times more to go contactless because their cards would require dual-interface chips. Relatively few contactless EMV cards are on issue.

Brian Triplett, senior vice president for emerging product development at Visa USA, said five of the top 10 Visa issuers in the United States have introduced contactless and momentum is growing.

He confirmed Visa plans to launch a national advertising campaign in the United States around its new Visa payWave contactless program. The campaign is expected to begin this summer and will try to give consumers a better grasp on contactless payment.

“This is consistent across Visa worldwide. We will continue to work with our issuers and merchants to sell that consistent story,” he said.

While Visa said it has been waiting until there are a sufficient number of contactless cards in circulation and merchants accepting them before launching a consumer advertising campaign, observers note Visa is playing catch-up with MasterCard Worldwide, which has heavily promoted its PayPass contactless brand in the United States. The belated Visa ad campaign is seen by the observers as an attempt to slow MasterCard’s momentum while boosting awareness among consumers and retail clerks, many of whom are completely clueless about contactless.

U.S. banks and payment card organizations that have launched contactless report impressive gains in use of contactless payment by consumers, with more transactions and higher spending per card or token. But these banks and card organizations haven’t yet released actual transaction figures.

For Suchanec, a major obstacle to getting more consumers to tap when they pay is persuading more merchants to accept the new form of payment.

Such big merchants as McDonald’s restaurants and 7-Eleven convenience stores take contactless at their thousands of locations across the country, and some sizable retail pharmacy, cinema and gasoline chains, also have signed on. But overall acceptance of contactless represents less than 5% of card-welcoming merchant locations.

“There are 6 million places where you can use your credit card, 45,000 (contactless acceptance locations) doesn’t excite me,” Suchanec said.

To encourage more U.S. merchants to move on contactless, he agreed the major card organizations might have to lower interchange, the major determinant of the fees merchants pay to banks on card transactions. “I think you have to bite the bullet,” he told Card Technology. “You’ve got to recognize cash transactions are different.”

As Card Technology recently reported, Visa Europe has agreed to lower interchange in the United Kingdom to try to attract more merchants for the planned launch of contactless payment in London this fall. MasterCard is expected to do the same.

Visa, MasterCard and American Express all told Card Technology, however, they have no plans to lower fees in the United States. They’ve subsidized the cost of terminals and readers for some merchants in the past. But they say the increasing card use by consumers and lower cash-handling costs will justify the investment by merchants in contactless.

“We do not intend to lower our discount rate,” Leigh Malnati, vice president for contactless payments at American Express told Card Technology. But he added during a presentation at the CTST conference in San Francisco that he sees the need for more places for consumers to tap their cards or tokens. “Until you have a better merchant coverage, there’s clearly a problem. It’s coming along. We would just like to see it come at a faster pace.”

Suchanec expresses even more doubts that contactless payment using NFC phones will take off anytime soon.

Interest continues to grow around the world in NFC, which embeds contactless chips and short-range antennas into phones and other devices, allowing them to emulate contactless payment, transit or building access cards; or act as contactless readers.

The relatively small but growing base of merchants in the United States that accept contactless would provide a ready infrastructure of readers for new mobile-payment services using the specially equipped phones, say backers. This would enable issuers to deliver their applications over the mobile network to handsets already in consumers’ pockets. They also could tie in electronic couponing and other support services to the payment applications, which their customers could access via colorful menus on their handsets.

Such large issuers as Citibank, Chase, HSBC and retailer 7-Eleven have launched NFC pilots in the United States, mostly involving consumers.

Bank of America began its own, low-profile, NFC trial late last year as part of a larger 5,000-employee pilot held at one of its corporate campuses, in Delaware, home of its MBNA division.

But the NFC portion of the trial flopped for a variety of reasons, says Suchanec, including an undesirable phone model and problems downloading the payment application to the handsets.

The bank gave employees a choice of the contactless form factors they could use and employees chose key fobs to phones by a six-to-one ratio, Suchanec said. The application available for download to the phones was PayPass from MasterCard.

“Active fob users averaged three times more transactions than phone users,” he said. “One of the problems they had with the phone, you can’t do more than one thing at a time; you can’t talk and pay.”

Users didn’t like the Nokia 3220 phone used in the trial, which wrapped up around March of this year. Employees even asked if the bank could download PayPass to their own handsets. The 3220 has been the workhorse of dozens of public and private NFC trials held around the world over the past two years. It has been one of the few NFC models available, after Nokia retrofitted the 3220 with a contactless chip and short-range antenna. But the model offers few other features subscribers would want.

There were other problems besides the unattractive phone. Users had trouble downloading the application. Bank of America’s technical staff had to help debug the code of the over-the-air platform from the beginning, Suchanec said. And the downloading process was confusing for consumers and took a long time–on average about 5 minutes for each download. Some of the delays or unsuccessful downloads were caused by a failure of the phones to receive the SMS messages sent via the OTA platform vendor, he said.

The bank used a platform developed by Germany-based Giesecke & Devrient, which transferred it to NFC platform vendor Venyon, a joint venture G&D formed with handset maker Nokia.

Venyon executives said they are unable to talk in detail about a specific customer project, including any reports of missed messages or time-consuming downloads. But they point out there are typically “issues” that crop up during trials. That’s especially true of trials involving a number of parties and new technologies, they say.

“This is especially important for NFC, as it consolidates a number of different elements, like the NFC mobile phone, secure element, applications, user interface, service provider system, mobile network, over-the-air platform and, of course, the actual contactless infrastructure,” said Venyon CEO Lauri Pesonen in a statement. “Venyon has certainly learned a lot in these trials.”

The Bank of America trial started late last year, just as Giesecke & Devrient was preparing to hand off the OTA platform to Venyon. Venyon senior vice president Andreas Schauer said it was one of the first trials of any kind downloading a bank-issued payment application. G&D had earlier downloaded a PayPass application as part of a trial in Dallas that officially launched in November.

In the Dallas trial, consumers had some problems downloading the applications, but MasterCard attributed them, for the most part, to spotty network coverage and unfamiliarity among most consumers with how to download programs or content to mobile phones.

A survey Bank of America conducted during or after its contactless payment trial showed participants rated the NFC phone as among the most negative part of their experience in the trial.

“You need to only have one bad experience throughout this whole process for people to abandon what they are doing,” said Suchanec.

The bank hasn’t given up on NFC or contactless, however. Suchanec says it plans a new NFC trial this summer among employees, using Nokia’s new 6131 NFC phone and another platform for downloading payment applications. The latter would allow users to make a phone call to request the application, reducing reliance on text messaging. Besides payment, the trial would include an application letting users tap contactless tags in posters to download discount coupons.

Overall, however, Suchanec said he believes it could take years before NFC is ready for roll out, at least in conjunction with contactless payment in the United States. “We’re a long way away from putting phones in the hands of consumers.”

Others might disagree, but what seems clear is it will be some time to come before contactless captures a sizable share of purchases now conducted by American consumers in cash. (2007-05-25)

Tuesday, May 22, 2007

Nonbanks in the Payments System - Conference Papers

Conference papers are best viewed with Adobe Acrobat Reader.
You may download a free version of the reader from the Adobe Acrobat website.

Nonbanks are becoming increasingly prominent in payments systems around the world. What are the implications of this heightened presence for innovation, competition, and risk? This international conference brought together three principal audiences – industry participants, academics, and public authorities – for an exchange of views and thoughts. The following issues were addressed:

  • What activities do banks and nonbanks perform in payments?
  • How has rising nonbank participation affected product innovation and market competition in the payments industry?
  • Do banks and nonbanks compete on a level playing field?
  • Is the current supervisory framework over bank and nonbank payment service providers adequate to control risk?
  • What role should public authorities play in overseeing retail payments in light of changing technologies and changing industrial structures?

The conference was held at the La Fonda Hotel, May 2-4, 2007, in Santa Fe, New Mexico. Preliminary papers for viewing are available below.

wednesday, may 2
Reception and Dinner
Welcome and Opening Remarks
Thomas M. Hoenig
President & Chief Executive Officer, Federal Reserve Bank of Kansas City
thursday, may 3
Session 1: Nonbank Payment Activities: An Overview
Authors: Simonetta Rosati
Senior Market Infrastructure Expert, European Central Bank
Stuart E. Weiner
Vice President & Director of Payments System Research,
Federal Reserve Bank of Kansas City
Paper: Nonbanks in the Payments System: European and U.S. Perspectives
Handout: Nonbanks in the Payments System: European and U.S. PerspectiveS
Session 2: Innovation
Author: Bronwyn Hall
Professor, University of California, Berkeley
Paper: Innovation in Nonbank Payment Systems
Moderator: Lee Manfred
Partner, First Annapolis
Handout: NonBanks in the Payment System: Innovation – Commentary and Questions
Panelists: Benjamin Ling
Group Product Manager, Google
Rene Pelegero
Senior Director of Industry Relations, Strategy & Compliance, PayPal
Handout: Innovation in Nonbank Payment Systems
Margaret Weichert
Senior Vice President, Payments & Strategy, Bank of America
Handout: Payments: An Opportunity for Innovation
Luncheon Address: Modernizing Payments: No Pain, No Gain
Gertrude Tumpel-Gugerell
Member of the Executive Board, European Central Bank
Remarks: ModerniZing payments: no pain, no gain
Session 3: Competition: Vertical Integration
Author: Nicholas Economides
Professor, New York University
Handout: Nonbanks in the Payments System: Vertical Integration
Moderator: Kenneth Posner
Managing Director, Morgan Stanley
Handout: Representative Payment Industry Competitive Landscape
Panelists: Michael Cook
Vice President & Assistant Treasurer, Wal-Mart
Handout: Nonbanks in the Payments System Competition: Vertical Integration
Trey Jinks
Senior Director, Corporate Strategy & Planning, TSYS
Pam Joseph
Vice Chair, U.S. Bancorp
Handout: Vertical Integration
Session 4: Competition: Horizontal Integration
Author: Jean-Charles Rochet
Professor, University of Toulouse
Paper: Some Economics of Horizontal Integration
in the Payments Industry
Moderator: Ken Howes
Director, Edgar Dunn & Company
Handout: NonBanks In The Payments System: Innovation, Competition and Risk
Panelists: Ben Haasdijk
Chairman, Equens
Handout: Consolidation & Integration
Gerard Hartsink
Chairman, European Payments Council
Handout: Horizontal Integration in the Payments Industry
David Yates
President, First Data International EMEA
friday, may 4
Session 5: Risk
Author: Ross Anderson
Professor, Cambridge University
Paper: Closing the Phishing Hole – Fraud, Risk and Nonbanks
Handout: Closing the Phishing Hole – Fraud, Risk and Nonbanks
Moderator: Avivah Litan
Vice President, Gartner Research
Handout: Phishing Attacks Leapfrog Despite Attempts to Stop Them
Panelists: Jean Bruesewitz
Senior Vice President, Visa U.S.A.
Roy DeCicco
Senior Vice President, JPMorgan Chase
Handout: Review and Commentary on Closing the Phishing Hole – Fraud, Risk and Nonbanks
Richard Oliver
Executive Vice President, Federal Reserve Bank of Atlanta
Handout: Review and Commentary on Closing the Phishing Hole – Fraud, Risk and Nonbanks
James Van Dyke
President, Javelin Strategy & Research
Handout: 2007 Trends In Financial Risk & Fraud
Remarks: What Rigorous Research Tells us about Risk in Payments and Financial Services
Session 6: Central Bank Perspectives
Speakers: Thomas M. Hoenig
President & Chief Executive Officer, Federal Reserve Bank of Kansas City
Philip Klopper
Executive Director, De Nederlandsche Bank
Handout: Nonbanks in the Dutch retail payments system: a central bank perspective
Philip Lowe
Assistant Governor, Reserve Bank of Australia

Mastercard + RBS + Paypass = Contactless Card

MasterCard hoping to launch Oyster-style payment card in London this year


mastercardMasterCard is aiming to launch the first contactless payment system in London later this year. The payments giant plans to beat rivals Visa and Apex by launching credit and debit cards with Royal Bank of Scotland using its PayPass system in the autumn.

The new card will allow customers to pay for their goods without the need to swipe a card or sign a receipt, in a way similar to the Oyster card system operated by Transport for London (TfL).

The London MasterCard launch covers the London corridor – north and south of the Thames, running from Waterloo to Canary Wharf. The cards, which will retain the existing chip and pin and magnetic stripe functions, will be issued through RBS, NatWest, MINT and Ulster Bank.

TfL has already signed a deal with Barclaycard and Visa to launch a range of Oyster-branded credit and debit cards, which are also expected in the autumn.

The cards are suited to transactions at fast food restaurants, coffee shops, newsagents, off-licences, bars, pubs, parking facilities and vending machines.

MasterCard UK country manager John Bushby says that consumers will love the convenience, simplicity and security of contactless cards when paying for everyday things.

It has already launched Paypass in the US and it also launched the first scheme in Europe with fast food chain McDonald's last month (MW April 12).

UK banking industry body APACS today confirms cross-industry plans to roll out the technology from September. It says there will then be a national upgrade in 2008.

Business Week chimes in Mobile Payments & Banking

Let the Phone Pick Up the Tab

Imagine having your very own mobile ATM—otherwise known as your cell phone—in the palm of your hand

Cheryl Bussani's son was grown up enough to move out of their Daly City (Calif.) home into his own place. But he still needed the occasional quick infusion of cash, and his new home in Pacifica, Calif., was far enough away that it wasn't convenient for Bussani to just drive over and drop off a few dollars. "It wasn't worth the gas," she explains.

So Bussani makes loans to her son via cell phone. She uses a service provided by Obopay, in Redwood City, Calif., that lets her transfer funds by dialing a few numbers on her wireless handset. The professional housecleaner also collects her own payments and pays bills with the service.

Bussani is part of the vanguard of U.S. mobile-phone subscribers who are doing their banking with wireless handsets. The practice is expected to gain traction in a matter of months when the likes of bigger, more established companies including banking powerhouse Citigroup (C) and wireless behemoth AT&T (T) kick off ad campaigns extolling the low cost and high convenience of paying over a mobile phone.

Following the Money

They may have a point on price. EBay's (EBAY) PayPal Mobile, which lets people wire funds and donate to charity through a phone, is free for many transactions. Obopay charges 10¢ to send money (see, 5/14/07, "Souping Up Your Cell Phone"); contrast that with Western Union (WU), which charges 11% for transfers within the U.S.

And there's reason to expect mobile-phone payments will become easier. While some early versions require a software download onto a phone, AT&T will begin including software on devices in the fourth quarter. Cell-phone makers like Nokia (NOK) and Kyocera, along with Visa and MasterCard (MA), are trialing phones with embedded chips that allow for contactless payments. Simply wave your phone in front of a reader to pay for purchases. That should cut checkout time by 50% to 70%, studies have found.

By 2012, 292 million phones sold worldwide will contain these so-called near-field communications chips, according to consultancy ABI Research. "Consumers tell us they are ready," says Pam Zuercher, vice-president of product innovation and coordination for Visa USA. The credit card association's March survey of 800 U.S. consumers showed that 57% would be interested in buying such a phone. And among 18- to 42-year-olds, 64% said they'd switch wireless carriers for it. "We believe mobile banking will be one of the bigger applications," says Greg Latour, senior vice-president of technology development at wireless carrier Cellular South, which, like carriers Amp'd Mobile and Helio, already offers Obopay.


If optimists like Latour are right—and considering the success of contactless payments in places such as Korea, there's reason to think they will be—the increased reliance on mobile payments is likely to have a ripple effect on financial services. Wireless service providers will demand their cut of financial transaction fees. Mobile payments are also expected to crimp demand for cash and checks, which still account for more than half of all consumer purchases.

At stake is $1.4 trillion in small payments of under $25 made in the U.S. each year. By 2010, about 10%, or $140 billion, of all payments under $25 will be made with contactless cards, estimates Dan Schatt, an analyst with consultancy Celent. Of those, 10% could be paid with mobile phones, he estimates.

Established players such as Visa, MasterCard, and First Data (FDC) will continue to angle for the business of processing payments and the right to collect the fees that amount to as much as 2% of purchases. But use of checks, printed by companies such as John H. Harland, could be affected. So could demand for ATMs, run by companies like First Data, recently purchased by an affiliate of private equity firm Kohlberg Kravis Roberts for $29 billion, Schatt says.

Plenty of Players

A number of upstarts stand to benefit. Schatt lists companies like Gemalto, which makes Smart Cards for contactless payments. Companies such as Atlanta-based Firethorn and Sausalito (Calif.)-based mFoundry, which power mobile banking and payments applications could profit from this move. So could outfits like ViVOtech, which sell related hardware such as in-store scanners. "We can get a bank up and running [on mobile phones] in six weeks," says Drew Sievers, co-founder and CEO of mFoundry.

Wireless service providers tend to keep tight reins on the applications they give users access to, and they will want a share of the transaction fees. Yet, unlike such carriers as Japan's NTT DoCoMo, U.S. wireless service providers are expected to stop short of offering financial services on their own. "We don't see any operators we deal with even considering this strategy," says Tripp Rackley, CEO of Firethorn.

And, of course, the service providers themselves could gain handsomely. Obopay is making a push with funding from investors like wireless powerhouse Qualcomm (QCOM). Web giants like Google (GOOG), already offering payment services online through Google Checkout, could potentially enter the fray. Cell-phone makers like Nokia could step into the market as well.


To prevent any business disruptions, processors have been among the first to jump into mobile payments. First Data doesn't see mobile payments as a threat: "We see it more as an extension of consumer choice," says Brian Friedman, vice-president of innovation for First Data financial institution services. It's not taking chances, though, and is ramping up mobile efforts. On May 2, First Data invested in ViVOtech and has committed to using the startup's hardware in offering contactless payments.

Visa and MasterCard are conducting near-field communications trials. Visa, for one, has developed its own mobile payments software. "Today, $17 of every $100 of spend is spent on a Visa card," says Visa USA's Zuercher. "We are looking at mobile as a way to shift [even more of this] spend." To that end, the company will be adding more capabilities, such as person-to-person money transfers and ticket purchases, later this year. Visa is also trying to address issues such as ease-of-use and security, which plague contactless payments in other countries (see, 11/21/06, "Contactless Payment Comes to Cell Phones").

And banks aren't sitting still. Citibank, for instance, is piloting Obopay with select customers. It's also trialing near-field communications in New York with Nokia and Cingular/AT&T. And then there's Citi Mobile, launched in April in California and expected to roll out nationwide by the end of May. Based on software from mFoundry, the service lets users search for ATM and branch locations, reach customer service, and check balances. "The uptake is within our expectations," says Steve Keitz, Citi Mobile Director. "We think this is the next step."

Kharif is a reporter for in Portland, Ore.

Mercator report on Micropayments

Solving the Micropayment Problem: Online and at the POS


Mercator Advisory Group is pleased to announce that its review of its latest report, Solving the Micropayment Problem, Online and at the Point of Sale. The report reviews both the history and challenges of electronic micropayments and examines how the existing rails have evolved to address under $5 electronic payments at both the point of sale and for online transactions.

In particular, the report examines the evolution of multiple micropayment models and how they have shifted the economics of micropayments, especially online. The ad-supported revenue model, powered by Google AdWords and other sponsored advertising sources, has significantly altered the need for a ubiquitous online "coin purse" for digital products below $0.75 in value. At the point of sale, micropayments have been successfully addressed by lower interchange rates for selected merchant categories and, in some markets, by contactless payments.

The Solving the Micropayment Problem report includes a review of market participants including PayPal, BSG Clearing Group, ClickandBuy, PaymentOne, and Peppercoin/Chockstone.

Highlights of the report include:

  • Online micropayments has been an unkind market segment for payment processors aggregating multiple small transactions as a pureplay processing service.
  • The early Internet dream of nearly frictionless purchases of sub $0.75 content has been made irrelevant by free content and the ad-supported revenue growth that powers the best free content sites as well as the growth of search giant Google.
  • Online, it is per transaction charges, not interchange, that eats up excessive margin for sub $1.50 digital content.
  • Given lower interchange rates for low-risk, high volume merchant categories such as QSRs, transit, parking and others where micropayments are common, barriers have dropped for the electronification of under $5 payments.
  • The markets for micropayments at the POS overlap with those for contactless payments.

"Under $5 micropayments online have been a persistent source of pain for content creators and distributors," comments George Peabody, Director of Mercator Advisory Group's Emerging Technologies Advisory Service. "Evolution of payment models such as ad-supported content creation and distribution have largely erased that pain. Coupled with subscriptions and payment aggregation, the online picture is clearer but still requires better solutions. Ironically, electronic micropayments work better at the POS than they do online."

One of the seven Exhibits included in this report.

This report is 23 pages long and contains 7 exhibits, 5 tables and a Glossary of Terms.

Members of Mercator Advisory Group have access to this report as well as the upcoming research for the year ahead, presentations, analyst access, and other membership benefits. Please visit us online at

For more information call Mercator Advisory Group's main line: 781-419-1700 or send email to

Javelin research on Mobile Banking

Javelin Studies Product Marketing Requirements for Mobile Banking

Javelin Strategy & Research has announced new research that it says "uncovers significant product marketing requirements for building banks' consumer usage of mobile services. While consumers are better primed for mobile banking now than they were in 2000, financial institutions (FIs) should not consider the mere availability of mobile banking a guarantee of success. FIs should prepare for measured, rather than widespread and immediate, adoption, even though consumers, handsets and mobile networks have made tremendous advancements."

As Javelin's new research shows, mobile banking and payments will grow as banks design products based on consumers' mobile needs for simplicity and immediacy while educating end users to curtail perceived risk factors. Early adopters are projected to be current mobile Internet users (MIUs), who represent 12% of US adults who own cell phones (approximately 27.8 million people). In order to appeal to this sizeable market, FIs will need to focus on the mobile preferences of this population first. These individuals require unique product design strategies, due to a distinct preference for how and why they log on.

Institutions must evaluate the tradeoffs of multiple platforms (downloadable app, SMS, browser-based app) in order to garner adoption beyond the mobile Internet users and reach other segments, such as Gen Y, risk-averse and higher-income consumers, who each have their distinct motivations for using mobile banking. According to President and Founder of Javelin Strategy & Research, James Van Dyke, "If 'anywhere, anytime' banking is the benefit of mobile banking, then providing all platforms satisfies the most fundamental consumer preference for 'anywhere.' By taking a targeted product and audience approach, banks and payments firms can finally increase the near-term return on mobile product and marketing investments."

On the other side of this mobile banking adoption equation are the perceived security vulnerabilities. According to the study of over 2,200 online consumers, one in two people (49%) perceives mobile banking to be unsafe, yet analytical review shows that this channel offers important security advantages and minimized risks compared to online banking. Institutions must proactively address the perceived security flaws while unflinchingly touting the relative safety advantages. Resulting from these survey findings is Javelin's call to the industry for an open forum collaboration for security requirements among carriers like AT&T, Cingular, Sprint, T-Mobile, Verizon, etc.; financial institutions; as well as leading vendors like ClairMail, Firethorn, Fronde, mFoundry, MShift, and M-Com.

For additional information, all of Javelin's Mobile Banking research is available along with other similar Javelin reports and custom mobile research by visiting or by calling (925) 225-9100 x 26.

Obopay partners with AIM

Obopay Introduces Mobile Payments for AOL's AIM Users

Obopay has announced the availability of a new AIM Obopay plugin for users of AOL's AIM service, the largest instant messaging community in the U.S. According to the company, "this new plugin allows eligible AIM users to launch Obopay and use it to make payments directly from the AIM Buddy List feature. Users can sign up for Obopay and download the free AIM Obopay plugin at"

PayPal becomes a bank...'twas inevitable

PayPal Obtains Bank Charter for European Union

PayPal has announced it has been granted a banking license for the European Union by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg, effective July 2, 2007. According to PayPal, "under this new charter, PayPal will be able to continue its European expansion by offering its services to more online merchants across Europe. In addition, PayPal will be moving its European headquarters to Luxembourg."

Wednesday, May 09, 2007

Inside Contactless + Mobile Distillery - Mobile Marketing Magazine

Partnership Targets NFC Interoperability

INSIDE Contactless, which provides advanced, open standard contactless chip technologies, and NFC (Near Field Ciommunication) technology solutions, has announced a partnership with Mobile Distillery, a Java mobile porting software company, to develop an interoperable Java ME solution for NFC developers. The companies are aiming to design a software solution for the development of portable NFC/Java mobile applications across multiple NFC phones. Based on Mobile Distillery’s Celsius architecture, the solution is aimed at mobile software developers, who will need to cope with multiple implementations of NFC technologies, adding more complexity to the development of Java ME applications across multiple handsets.
By using the NFC Celsius module, the developer will be able to work on the NFC/Java ME application once, and run it across all NFC phones without any further modifications. The key benefits of the NFC Celsius module, the companies say, will be accelerated time-to-market, reduction of costs and an easy transfer to upcoming NFC phones.
The partnership is divided into two phases: firstly in the short term, the two companies will be develop a Celsius NFC prototype by the end of Q3 2007. The second step, planned for Q1 2008, will consist of the joint development of the NFC Celsius module, a complete set of Java ME NFC tools covering the commercially available NFC handsets, and ones for the near future.
“As a reference mobile execution platform, Java ME enjoyed tremendous success over the past five years, and is widely recognised by the mobile developers community, but it also undergoes an irresistible trend to fragmentation, with significantly different implementations in handsets from various vendors” says Philippe Martineau, INSIDE’s Executive Vice President of the NFC Business Line. “As an NFC pioneer and market leader, INSIDE believes that interoperability is a key success factor in delivering NFC-based services. We have a role to play and the proper expertise to bring the full benefits of the NFC standard to the NFC developers community.”

Friday, May 04, 2007

Digital Money Forum 2007


ClairMail Mobile Baking -Payments News

ClairMail, TELUS Offer Mobile Banking to Canadian Banks

ClairMail has announced a strategic partnership with TELUS, a Canadian national telecommunications company, to enable retail banks, credit unions, brokerages, and credit card companies across Canada to offer mobile banking and payments services.

Offered exclusively in Canada by TELUS, the solution will be branded “2–Way Mobile Customer Interaction powered by ClairMail.” It easily integrates with a financial institution’s back-end systems, enabling customers to directly access their accounts and providing financial institutions with direct access to their customers. ClairMail also offers a host of new features to power retail banking services, including actionable alerts (2-way alerts for questionable account activity, transaction approvals and other issues requiring active customer involvement), on-demand access to account information, and no-hold customer service.

“ClairMail’s technology and applications are the only comprehensive solution for delivering banking and payments capabilities to mobile devices, regardless of carrier or model, with no new software required on the mobile phone,” said Joseph Salesky, CEO of ClairMail. “This enables TELUS to provide Canadian financial institutions with a solution for delivering mobile banking services to their customers in the most convenient, efficient way possible.”

“The addition of ClairMail’s messaging-powered mobile banking and payments system to our dynamic offering of application services, managed infrastructure solutions, and IP-based Next-Generation network further strengthens our leading position in the Canadian market,” said Luc Vilandré, vice-president, TELUS National Application Solutions. “When deciding among providers of mobile banking and payment solutions, we chose ClairMail because their approach is unique in its ability to enable competitive differentiation, create efficiencies, and enhanced client satisfaction for our enterprise customers.”

ClairMail is the only solution for two-way mobile customer interaction that does not require downloading additional software onto mobile phones. Leveraging the existing messaging capabilities already on mobile devices, including short message service (SMS), wireless email and the mobile browser, ClairMail allows secure banking transactions regardless of carrier, manufacturer, operating system or wireless transmission standard.

Utilizing the security of multi-factor authentication – the principle of requiring something only the user has (mobile phone) and something only the user knows (PIN number) – made even more secure by performing transaction-level authorizations out-of-band, ClairMail provides strong security and convenience without risking customer privacy. In fact, the ClairMail solution exceeds U.S. Federal Financial Institutions Examination Council (FFIEC) requirements for multi-factor authentication.

WSJ - Mobile Banking shifts into Higher Gear

Firethorn Mobile Banking & Payments solution - Payments News

Firethorn, Verizon Work to Introduce Mobile Banking, Payments Solution

Firethorn Holdings has confirmed that "Verizon Wireless is
working with Firethorn to introduce its mobile banking and payments
solution. The announcement demonstrates growing support among the nation's
leading wireless carriers for Firethorn's unique federation strategy for
making the mobile banking and payments marketplace."

Functioning as a federation to financial institutions and wireless carriers, Firethorn assembles, connects and manages the complex web of partners, network standards, and platform interfaces that make mobile banking and payments possible. To encourage adoption, Firethorn is working with all federation partners to launch joint marketing efforts and embed the Firethorn application which will enable and encourage consumer adoption.

"The mobile banking and payments industry took a giant step forward today, as Verizon Wireless agreed to join the Firethorn federation," said Firethorn Chairman and CEO Tripp Rackley. "We welcome and look forward to working with them to deliver the control and convenience of mobile banking and payments to every consumer."

The Firethorn solution is a single, secure application, authorized by the wireless carrier and controlled by the consumer. The application, which is designed to work for any institution on virtually any mobile device, enables comprehensive banking and payments capabilities.

Through the Firethorn solution, consumers can view account balances and history, transfer funds, receive and pay bills, and quickly clear contents if their mobile device is ever lost or stolen. Consumers can perform functions on any supported wireless handset, even when their device is offline.

Obopay Checkout

Obopay Introduces Obopay Checkout - Payment News

Obopay has announced the introduction of Obopay Checkout, calling it "an industry-first capability that enables mobile merchants to offer consumers effortless, instant payments that monetize digital and physical offerings."

"Obopay has been experiencing rapid adoption of our person-to-person mobile payments service," said Carol Realini, CEO of Obopay. "Obopay Checkout creates another way for consumers to do more with Obopay and live the mobile lifestyle."

Leveraging the Obopay Mobile Merchant Platform, Obopay Checkout makes it simple and secure for consumers to purchase goods and services in real-time directly from mobile phones. Consumers benefit from easier transactions and thus drive more business to mobile merchants.

"This announcement marks the first time merchants and application providers will be able to offer consumers an effortless way to make purchases from their mobile phones. This translates into increased commerce and immediate monetary realization for mobile merchants," added Realini.

Which Doesn't tell us much, so let's look at another report

Obopay Says Response ‘Super Positive’ for New M-Commerce Platform - Digital Transactions News

(April 5, 2007) Mobile-payments processor Obopay Inc. expects to have at least 20 merchants accepting transactions through its new platform by the end of the year, a top executive with the Redwood City, Calif.-based company says. Obopay introduced its so-called mobile merchant platform, which extends the 2-year-old processor’s reach beyond person-to-person payments into mobile commerce with online sellers, last week at a major wireless trade show.

Reaction from merchants so far has been “super positive,” says Howard B. Gefen, executive vice president for marketing and business development at Obopay. “They see the potential. They want to try it out and see if it improves their conversion rates.” The first two merchants to sign on are Xringer Inc., a marketer of ring tones and other music-related items, and Cellfire Inc., an online marketer that provides digital coupons to mobile phones. Gefen says Obopay is in talks with Soapbox Mobile Inc., a mobile marketing firm that helps sell movie tickets, among other merchandise. “We’re working with the first several to get it right,” says Gefen. “Then it’ll be programmatic.”

Obopay lets handset users pay other individuals and now merchants via prepaid accounts, allowing for what Gefen calls real-time settlement. “It’s all about real-time mobile payments,” he says. The company hopes this will appeal to online merchants confronted with credit cards and short-message-service (SMS) billing, both of which are relatively expensive, as their most likely payment alternatives when they move to m-commerce.

The platform, which the processor is billing as Obopay Checkout, is aimed primarily at sellers of impulse items and digital content and marketers of events and venues. Sellers will create mobile applications that users will access on their handsets. Xringer, for example, could use Obopay Checkout to peddle concert tickets and band-related merchandise, such as T-shirts, to customers armed with mobile phones. Customers can have the items shipped to the addresses on file with their Obopay accounts, or pick them up by showing a bar code and transaction code sent to their phones.

But the processor, which relies on the cooperation of wireless carriers, will not target digital-content merchants that use wireless carriers to handle their billing, says Gefen. Carriers typically levy 30% or more of the sale in transaction fees, a business Obopay doesn’t want to interfere with. “We’re very mindful of the carriers,” he says. “The carriers are our partners.” Obopay Checkout’s merchant fees are not disclosed, though Gefen says they will be “very compelling.” Merchants that sign on early, he says, “will get quite the break.”

Obopay may soon see heavy-duty competition in the race to sign up merchants. Online payments kingpin PayPal Inc., which launched its PayPal Mobile service a year ago, told Digital Transactions News early last month that it planned to unveil an m-commerce version of the product soon (Digital Transactions News, March 1).

Thursday, May 03, 2007

Another US entrant - MobiBucks

Introducing MobiBucks - Another Mobile Payments Approach

MonVia, a specialty firm that helps accelerate the growth of early stage start-ups, has announced the launch of MobiBucks, a new mobile payment solution. According to MobiBucks, "with just a cell phone number and four-digit Personal Identification Number (PIN), consumers can now easily make free and secure cashless transactions on everyday purchases." MobiBucks was founded by Jorge Fernandes, founder and former CEO of ViVOtech, and Dave Barram, a Senior Silicon Valley Executive at Apple, Silicon Graphics and Hewlett-Packard.

Available in heavily-trafficked consumer locations, such as cafés, sandwich shops, gas stations, grocery stores, movie theatres and convenience stores, MobiBucks allows participating merchants and customers to access a payment system that mobilizes consumer cash and gift cards. Features of MobiBucks include:
  • Ability to convert cash into electronic payments using a cell phone even if the cell phone may not be on-hand
  • Uses the ubiquitous mobile phone number as a unique identifier, and a secure PIN to conduct commerce
  • No need to force consumers to purchase a new cell phone and merchants can also keep their existing payment systems
  • Eliminates critical issues related to cell phone payments such as running out of power and unsafe or unreliable conditions
"By using a device that approximately two billion people already have, MobiBucks' patent pending technology is the ultimate solution and the future of mobile payment," said Dave Barram, co-founder and CEO of MobiBucks.

"Through a soft beta launch, we were thrilled to discover that consumers love MobiBucks because it's a free, convenient and fast way to pay without having their wallet on them," said Jorge Fernandes, co-founder and president of MobiBucks. "As a result, we believe we can convert more than 50 percent of all cash transactions at these high traffic consumer locations."

The MobiBucks process involves four easy steps:

  • One-time registration - Register for a MobiBucks card, retailer's gift card or a combination MobiBucks card compatible with multiple retailers
  • Top-up - Add money to a MobiBucks account in-store or online and as often as necessary
  • Make transactions - Purchase at any time, whether it's daily, weekly or monthly
  • Check balances and transactions - Check MobiBucks account at any time online or via cell phone
"Consumers tend to spend more when they are not using cash as a form of payment," added Fernandes. "With MobiBucks, merchants will be able to convert cash into electronic payments and ultimately increase sales."

Tuesday, May 01, 2007

Forrestor reports low market need for P2P mobile payments

Michelle  de Lussanet April 19, 2007
Person-To-Person Payment Goes Mobile
But P2P Mobile Payment Is A Technology In Search Of A Market
by Michelle de Lussanet
with Lizet Menke, Benjamin Ensor

This is a document excerptEXECUTIVE SUMMARY

A number of firms in Western Europe have recently launched payment systems that allow consumers to make person-to-person payments using their mobile phones. Executives at other payment system operators, mobile operators, and banks need not rush to follow suit. We are not convinced that there is a large market for these new systems: Currently P2P supports only well-defined, narrow payment scenarios like mobile airtime prepay top-up of another person's prepay account. Instead, P2P payments are likely to become just one feature within broader mobile banking and mobile payment services.

Mobile Banking still in low demand

Study Says Limited Consumer Interest in Mobile Banking

JupiterResearch says it "has found that despite renewed efforts on the part of financial institutions, overall interest in mobile banking services is limited. Just eight percent of online consumers who own a cell phone are interested in using mobile browsing to check account balances."

Mobile Visa Card - MoCoNews

Mobile Visa Card Launched

By James Quintana Pearce - Wed 11 Apr 2007 06:34 AM PST

A mobile Visa debit card has been launched by MP3NY, the “boutique brand engineering firm” founded by Kevin Watson, also known as T-Weed on the TV show I Love New York, which is shown on VH1. The card allows wireless banking and potential customers only need a mobile phone and a US address. It’s targeted at unbanked Americans, small business owners and immigrants. If it works in Africa it can work in the US, the big question would be getting people to know about the card. (release)

Cingular & MasterCard Pay Pass trial in NY - MoCoNews

Cingular To Test Mobile Wallet In NYC For Three Months; Content Discovery Posters Planned

By Rafat Ali - Thu 14 Dec 2006 08:29 PM PST

imageThe needle is finally moving in U.S. on mobile payments, after some startups have emerged in the space over the last year or so. Now Cingular is teaming with Nokia and financial institutions Citigroup and MasterCard Worldwide to trial new phones that have MasterCard PayPass contactless payment capability, reports The trial, which is expected to last three to six months, will help the companies evaluate the speed and convenience of this service.

The participants will receive a Nokia handset with “near-field communication” (NFC) technology and the MasterCard PayPass payment function built in. Participants will be able to make purchases wherever MasterCard’s PayPass is accepted by holding their phone near the card reader. The payment is then deducted from the subscriber’s account.

More about the trial on the service website, here. Also the official release here. Planned on the mobile content side: special content discovery smart posters located in the city featuring the trial symbol, with offers to download voice tones, movie trailers, and mobile phone wallpapers. Lots more details in the FAQs here.

Mobile Industry Settling On Mobile Banking Standard

Mobile Industry Settling On Mobile Banking Standard

MobileMail puts money into TxtNation

MobileMail To Buy Into TxtNation

UK-based MobileMail has announced plans to buy 49 percent of compatriot txtNation for 1.25 million pounds (US$2.5 million) in cash and US$7 million in stock over an 11 month period. TxtNation provides mobile messaging, content and billing services, and MobileMail (which targets the PC-to-mobile communication market) is buying into it with plans to provide an end-to-end solution for companies in the mobile industry.

Vodafone Mobile Payments for German Trains - ECT

Vodafone Tests Mobile-Payment System in Germany

Speaking at the CeBIT computing expo in Hannover, British-based Vodafone and Deutsche Bahn said they hoped to develop a system that would be salable to other companies within the next year. Bahn planned to introduce the system nationally after the pilot phase. To participate, phones must be equipped with near field communication modules, which are fitted in many handsets.

Worldwide wireless company Vodafone (NYSE: VOD) Latest News about Vodafone said Friday it would make a fresh foray into the micro-banking business Save 15% on Your Next Domain Purchase. Click Here., testing a mobile payments system in partnership with German railways company Deutsche Bahn.

Instead of buying tickets, passengers will simply press a button on their mobile phones as they hold it near a "touch-point" when they board and disembark from a train. They will then receive a monthly bill for the total of their travel.

The pilot project, code-named Touch & Travel, would be operated from October on an intercity line between the German capital Berlin and Hannover, Germany, and on public transport in the suburbs of Berlin.

Near Field Communication

Speaking at the CeBIT computing expo in Hannover, British-based Vodafone and Bahn said they hoped to develop a system that would be salable to other companies within the next year. Bahn planned to introduce the system nationally after the pilot phase.

To participate, phones must be equipped with near field communication (NFC) modules, which are fitted in many handsets.

Previously Tested

Big international phone groups have in the past tested schemes to use phones as devices to make small payments. Such systems would have made phone companies competitors to the credit card industry, with customers settling their bills monthly with the phone company.system

Previous mobile phone projects were abandoned after phone companies grew concerned at the high risks and lack of profits.

© 2007 Deutsche Presse-Agentur. All rights reserved.
© 2007 ECT News Network. All rights reserved.