Mobile payment solutions can be
classified according to the type of payment method adopted to implement the
solution. There are three different models available for m-payment solutions on
the basis of payment method used
a) Bank account based
b) Credit card based
c)
Telecommunication company billing based
Bank Account
based Mobile Payment
Banks and telecommunication can
collaborate to provide an m-payment solution it is a win-win situation for both
industries. In this model, the bank account is linked to the mobile phone
number of the customer. When the customer makes a mobile payment transaction
with a merchant, the bank account of the customer is debited and the value is
credited to the merchant account.
Credit Card
based Mobile Payment
In the credit card based mobile
payment model, the credit card number is linked to the mobile phone number of
the customer. When the customer makes a payment transaction with a merchant,
the credit card is charged and the value is credited to the merchant account.
Telecommunication
Company Billing of Mobile Payments
Customers may make payment to
merchants using his or her mobile phone and this may be charged to the mobile
airtime bill of the customer. The customer then settles the bill with the
telecommunication company.
Technologies for Mobile Payments
The Mobile payments requires
the mobile application and the communication medium to send and receive payment
data
Mobile Wallet Applications can be classified as
Phone-based
Application (J2ME/BREW)
The client mobile payment
application can reside on the mobile phone of the customer. This application
can be developed in Java (J2ME) for GSM mobile phones and in Binary Runtime
Environment for Wireless (BREW) for CDMA mobile phones. Personalization of the
phones can be done over the air (OTA).
SIM-based
Application
The subscriber identity
module (SIM) used in GSM mobile phones is a smart card i.e., it is a small chip
with processing power and memory. The information in the SIM can be protected
using cryptographic algorithms and keys. This makes SIM applications relatively
more secure than client applications that reside on the mobile phone. Also,
whenever the customer acquires a new handset only the SIM card needs to be
moved. If the application is placed on
the phone, a new handset has to be personalized again.
Communication medium for Mobile Payments
The mobile technology
landscape provides various communication possibilities for implementing mobile payments.
Essentially, a GSM mobile phone may send or receive information through 3
possible channels – SMS, USSD or WAP/GPRS. The choice of the channel influences
the way mobile payment schemes are implemented. Secondly, the mobile payment
client application may reside on the phone or else it may reside in the
subscriber identity module (SIM).
Short Message
Service (SMS)
This is a text message
service that enables short messages (140-160 characters) that can be
transmitted from a mobile phone. Short messages are stored and forwarded by SMS
centers. SMS messages have a channel of access to phone different from the
voice channel SMS can be used to provide information about the status of one’s
account with the bank (informational) or can be used to transmit payment
instructions from the phone (transactional).
Unstructured
Supplementary Services Delivery (USSD)
Unstructured Supplementary
Service Data (USSD) is a technology unique to GSM. It is a capability built
into the GSM standard for support of transmitting information over the
signaling channels of the GSM network. USSD provides session-based
communication, enabling a variety of applications. USSD is session oriented
transaction-oriented technology while SMS is a store-and-forward technology. Turnaround
response times for interactive applications are shorter for USSD than SMS.USSD
is also non charged as compared to SMS. Both SMS and USSD does not need data
plan activated and can be used on generic cheap mobile phones also
WAP/GPRS
General Packet Radio Service
(GPRS) or Data is a mobile data service available to GSM users. GPRS provides
packet-switched data for GSM networks. GPRS enables services such as Wireless
Application Protocol (WAP) access, Multimedia Messaging Service (MMS), and for
Internet communication services such as email and World Wide Web access in
mobile phones.
Near Field
Communication (NFC)
NFC is the fusion of
contactless smartcard (RFID) and a mobile phone. The mobile phone can be used
as a contactless credit / debit card. NFC enabled phones can act as RFID tags
or readers. This creates opportunity to make innovative applications especially
in ticketing and couponing. This technology needs the device to support NFC
communication
Dual Chip
Usually the m-payment application
is integrated into the SIM card. Normally, SIM cards are purchased in bulk by
telecom companies and then customized for use before sale. If the mobile payment
application service provider has to write an m-payment application in the SIM
card, this has to be done in collaboration with the telecommunications operator
(the owner of the SIM). To avoid this, dual chip phones have two slots one for
a SIM card (telephony) and another for a payment chip card. But, customers
would have to invest in dual chip mobile devices.
SIM Based Mobile
Wallet
The mobile payment
application software resides on the mobile phone and the card data is stored
SIM with details of the customer (and his or her bank account details or credit
card information)
The Customer registers the
card data and the security required with
telecom operator. On confirmation this data is send to the mobile over
the air (OTA) to update the SIM storage with the m-pin which is later on send
to the customer as a PIN Mailer
- User need to register with his telecom Operator for wallet
- Telecom Operator has tie up with Acquiring Bank
- VISA / MC act as Certificate Authority for the acquiring bank
- If the card is on-us the acquiring bank will validate it else it will send it to the interchange for validation
- If card details are fine the telecom operator will send a tokenized data to be updated to the mobile SIM on OTA using HSM and Payment Tokenization Server
- The generate mPIN is also send to the User through Pin Mailer
Mobile Payment
Flow using Merchant POS / Website
Mobile Payment Flow using SMS and Merchant Mobile No
- Users pays on merchant NFC Pos or Merchant Site using wallet or using SMS with structured SMS data
- Merchant application calls the api provided by the telecom to access the SIM data using certificate and the mPIN provided by the user.
- The SIM will respond back the stored token which is send to the Telecom Wallet platform using SMS, USSD, API over the wap
- The Mobile wallet validates the token and mpin again on the HSM and sends the card data to the acquiring bank as a sale or purchase transaction
- After approval the response is send back to the merchant application
Advantage of
this approach
- Highly Secured using digital certificate and mpin
- . Generic protocol can be used and no need of smart
- . High Mobile penetration provide a large customer base
- . Easy, Cheap and fast payment
- . Zero or low cost of usage
- . Easy integration to existing system
- . New revenue option for telecom providers
- . Bank can save a lot on pos machines and its operations
