Design of a new payment service

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Design of a new payment service
Stamatis KarnouskosFraunhofer FOKUS Stamatis.Karn
ouskos_at_fokus.fraunhofer.de
András VilmosSafepay Systems vilmos_at_safepaysys.co
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Some Numbers

• 118 million Europeans, 145 million Asians and 22
  million Americans intend to use their mobile
  phone for paying small purchases (TowerGroup).
• Volume of mobile business will reach 225 Billion
  by 2005 (United Nations Conference on Trade and
  Development).
• Mobile Internet-based mobile payment market will
  grow from around 5 billion in 2002 to nearly 55
  billion in 2006 (Wireless World Forum ).
• 44 of 5,600 mobile phone users on 4 continents
  surveyed in the February 2002 (global Mobinet
  study) would like to use their mobile phones for
  small cash transactions.

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mPay Actors
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What is really mobile payment?

• Any payment where a mobile device is used in
  order to initiate, activate and/or confirm this
  payment can be considered as a mobile payment.
• YES this includes PDAs, SmartPhones, Payment
  Terminals etc

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Mobile payments

• Potential to boost mCommerce and eCommerce
• What will be the role of Banks and Mobile Network
  Operators?
• Micro (MNO?) ?? Mini (Bank/MNO) ?? Macro payments
  (Bank)
• mPay is different because of
• High penetration rate of mobile phones
• Evolvement of mobile phones to PTD (Personal
  Trusted Devices)
• Modern infrastructure user devices evolving
• Existing customer bases/relations
• Factors that affect mobile payments
• Simplicity/usability
• Universality
• Interoperability
• Security, trust and privacy
• Cost, speed
• Legacy infrastructure ? forwards compatibility

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SEMOPS partners

• Info
• 24 months (more than 550 MMs)
• 4 countries (15 participants)
• 2 phases - research and development
  demonstration

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SEMOPS Secure Mobile Payment Service

• Benefits
• Bank MNO cooperation
• Existing Customer Bases Trust Relationships
• Real Time Notification Fund reservation
• Global Payment
• All payment types
• Security/Privacy

• Example Transaction
• Merchant ?? Customer (transaction details)
• Customer ?? Bank/MNO
• Bank/MNO (Customer) ?? DataCenter ??Bank/MNO
  (Merchant)
• Bank/MNO ??(Merchant)

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General SEMOPS model
Payment processor
Data Center
Payment processor
POS
Payment processing can also be outsourced, 3rd
party service providers.
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Specifics of the model
many banks many MNOs
micro-mini-macro mobile-internet proximity-remote
domestic-international
end-to-end full automation real time processing
technology, processes, rules, business concept
no centralized registration, no
centralized authorization
anyone, anything, anytime, anywhere
bank account, MNO account
anonymity, guaranteed payment, trusted
partner, complex protection, PKI.
personalization, simple menus,
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Open/Distributed approach

• By involving new partners in the service
  provisioning the number of potential transactions
  increases rapidly ? quick reach of the critical
  mass (success/survivability of service).

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Economics of the model

• Revenue maximization
• Largest clientele
• Clientele of many mobile operators
• customers
• prepaid
• post paid
• merchants
• Clientele of many banks
• customers
• merchants
• Sales channel diversification
• mobile
• internet
• traditional (POS)
• Various transaction types
• in band
• out of band
• P2P
• B2B

• Cost efficiency
• Optimized processing
• MNO micro/mini value
• Bank mini/macro value
• Low unit cost
• local Data Center for all transactions
• full automation
• leveraging existing infrastructure
• Optimized settlement
• debiting prepaid accounts
• few, but high value transfers
• Optimized communication
• VPN (leased lines)
• MNO client communication
• Internet
• Standardized solutions
• existing standards
• new initiatives
• Complex security solution

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Favourable effects

• Banks
• allows inexpensive entry to E- and M-business
• generates new transaction revenues
• allows inter-bank, bank-mobile operator
  cooperation
• improves access to other home banking products
• leverages traditional banking processes and
  infrastructure

• Mobile operators
• increases ARPU
• opens new line of business, with related new
  revenue sources
• allows cooperation with banks and other mobile
  operators
• increases customer loyalty
• paves the way to new mobile services and
  applications
• branding

• Merchants
• increases collection security.
• increases the number of realized transactions
• opens E- and M-commerce to new clientele
• cost savings

• Customers
• provides secure payment method in E- and
  M-commerce
• simplifies and accelerates payment transactions
• allows payments to a large number of persons,
  retailers, or businesses

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Thank you for your attention. www.semops.com Q
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