WIRELESS ELECTRONIC PAYMENT SYSTEMS

Wireless payment systems transform mobile phones into secure, self-contained purchasing tools capable of instantly authorizing payments over the cellular network. The city of Montreal, Canada, installed smart parking payment terminals that process Pay & Go mode wireless secure e –payments powered by solar panels. The parking terminals also provide information on parking space utilization to a central system (8d.com, 2006). In many countries wireless purchase of tickets to movies and other events is popular.
Micropayments. If you were in Frankfurt, Germany, or Tokyo, Japan, for example, and took a taxi ride, you could pay the taxi driver using your cell phone. As discussed in Chapter 6, electronic payments for small-purchase amounts (generally $3 or less) are called micropayments. The demand for wireless micropayments systems is fairly high. Edgar, Dunn & Company’s 2006 Mobile Payments Study found that:
• Survey respondents believe that mobile payments will reach a critical mass of consumers and become as important as other types of payments, such as credit and debit cards, but it may take 10 years.
• The most significant barriers to the adoption of online mobile payments are the transaction costs charged by mobile carriers and the limited availability of micropayments alternatives.
Payments by cell phones are becoming popular in Japan, where customers can pay train fares vending machines, etc., using their cell phones (see Foster, 2008).
An Israeli firm, TeleVend, Inc,(televend.com), has pioneered a secure platform that allows subscribers to make payments using mobile phones of any type on any cellular infrastructure. A customer places a mobile phone call to a number stipulated by the merchant, to authorize a vending device to dispense the service. Connecting to a TeleVend server, the user selects the appropriate transaction option to authorize payment. Billing can be made to the customer’s bank or credit card account or to the mobile phone bill. Micropayment technology has a wide range of applications, such as making payments to parking garages, restaurants, grocery stores, and public transportation.
Mobile (Wireless) Wallets. An e-wallet (see Chapter 6) is a piece of software that stores an online shopper’s credit card numbers and other personal information so that the shopper does not have to reenter that information for every online purchase. In the recent past, companies such as Motorola offered m-wallet (mobile wallet, also known as wireless wallet) technologies that enabled cardholders to make purchases with a single click from their mobile devices. While most of these companies are now defunct, some cell phone providers have incorporated m-wallets in their offerings. Since 2004, NTT DoCoMo Japan has been selling phones with chips in them that can be scanned by a short-range wireless reader at tens of thousands of stores. Similar capabilities using Near Field Communications (NFC) started to grow in the United States beginning in 2007 and are forecasted to reach more than half of all handsets sold by 2010 (Smith, 2006).
A handset-based service allowing consumers to send money to individuals both in and outside the United States through Western Union locations incorporates mobile wallets. That development allows, for example, users of Trumpet Mobile, a reseller of prepaid wireless service for Sprint Nextel Corp., to send money to other persons directly, without the need for prepaid cards. It also allows users to make point-of-sale transactions with their phones, relying either on contactless technology or PIN code capability. In 2008, Affinity Mobile initiated a nationwide person-to-per-son money-transfer service involving Western Union and Radio Shack Corp., whose electronics stores sell Trumpet’s phones and service.
Motorola m-wallet solutions available as of 2008 include: New Merchant/Bank Service-transaction fees, merchant handsets; Value-Added Services-person-to-person, money orders, ticketing and coupons, bill payments; and Co-Branding and Cross-Selling with banks and merchants (Motorola,2008).
Wireless Bill Payments. In addition to paying bills through wireline banking or from ATMs, a number of companies are now providing their customer with the option of paying their bills directly from a cell phone. HDFC Bank of India (hdfcbank.com), for example, allows customers to pay their utility bills using SMS.