Mobile payment referred to mobile money, mobile money transfer, and mobile wallet. M-commerce applications inevitably require essential underlying connectivity features, mobile access adaptation, mobile user profile and mobile security. The art of work will be combining security and usability to provide a smooth, fast and comprehensive mobile e-payment for consumers.
Mobile payment referred to mobile money, mobile money transfer, and mobile wallet. M-commerce applications inevitably require essential underlying connectivity features, mobile access adaptation, mobile user profile and mobile security. The art of work will be combining security and usability to provide a smooth, fast and comprehensive mobile e-payment for consumers.
Mobile payment referred to mobile money, mobile money transfer, and mobile wallet. M-commerce applications inevitably require essential underlying connectivity features, mobile access adaptation, mobile user profile and mobile security. The art of work will be combining security and usability to provide a smooth, fast and comprehensive mobile e-payment for consumers.
Mobile payment referred to mobile money, mobile money transfer, and mobile wallet generally refer to payment services operated under financial regulation and performed from or via a mobile device. Instead of paying with cash, cheque, or credit cards, a consumer can use a mobile phone to pay for a wide range of services and digital or hard goods. Recent developments of communications technologies and business models raised concerns about mobile payment systems in terms of usability and security. Rising smart mobile devices with variety of usage and privacy and easy access to communication protocols have provided the potentials for growing development of mobile commerce. Furthermore, new business models in daily activities have increased the need of comprehensive mobile e-commerce system. The main desire in mobile payments is providing a convenient way of payment so that a customer can perform payment anytime, anywhere for any available services. Depending on interaction model, m-commerce applications could be classified into three types: client to server, client to proxy server, and peer-to-peer. Also, m- commerce applications inevitably require essential underlying connectivity features, mobile access adaptation, mobile user profile and mobile security . On the other hand, new technologies usually bring new risk and challenges despite new capabilities and services. In order to design a desired payment method, the inherited risks of new technologies must be overcome in order to leverage their capabilities in handling existing obstacles of payment transactions in corresponding markets. Mobile payment methods have always been critical, since they are dealing with credits or money. So, providing an adequate security would be mandatory and an inevitable aspect of mobile payments. On the other hand, there has been an issue to preserve a trade-off between usability and security of mobile payments, so that providing maximum security can affect or even violate the usability of mobile payments in practice. The art of work will be combining security and usability to provide a smooth, fast and comprehensive mobile e-payment for end-users. This artifact would be able to evolve into a financial system supporting transaction environments which eliminates or minimizes physical cash handling, as a potential in eliminating criminal activities.
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Basically, m-payment process may be implemented in different scenarios, but it includes some fundamental steps: registration, payment submission, authentication and authorization of parties by system service provider, and the final confirmation. In order to provide a secure and comprehensive m-payment, the payment scenario should be designed so that it performs fast and simple for the end-user, but secure and comprehensive for the provider. Different mobile payment systems have been considered and evaluated relevant to our proposed system design. There are two groups of criteria that ought to be considered relevant: functional and architectural. The functional criteria basically should enforce the system policy and what the system should be able to do to satisfy the system requirements and the architectural criteria; Interoperability, Usability, Simplicity, Security, Privacy, Trust, Cost and Availability define how the system should be constructed. Also, the system design and architecture support various financial mobile applications and transactions. Since all the functions and transactions are basically financial operations, the main concern must be their security. Therefore, one of the most distinguished features of the whole system architecture is its comprehensive security. In fact, system architecture is designed in such a way that existing components can be enhanced with security countermeasures, so that the integrity and availability of the whole system would be preserved. As mobile devices have been transforming into personal trust devices, mobile payment is recognized as interactions between parties in a e-payment system with specific context (e.g.business models, player relationships) and capabilities (mobile device capabilities) so that there is at least one party as a mobile user. Basically, the context of m-payments includes any payment in which a mobile device is used in order to initiate, activate, and confirm the payment. There are three initiatives that could be considered to best suit mobile payments. First, a mobile device is the most convenient and possible payment technology for mobile context and service purchases. Second, the diminishing use of cash provides the potentials to develop new substitute payment approaches for low value transactions using financial service stations. Third, need of a cost-effective means to charge macro-payments in m-commerce environment. 4
Fig.1
As Figure.1 shows, m-payment system is merely registering and forwarding the authorized and validated payment transactions. Payment system life-cycle includes payment request creation, payment request authorization, and payment request committal. Principally, m-payments occur between four stakeholders: mobile consumers subscribe to a service, merchants, who provide product or service to consumers, payment service provider, which controls the payment process and the trusted third party that administers the authentication of other players and the authorization of payment settlement. Note that different roles can be merged into one party and act as one player. For example, payment service provider, which controls payment process and trusted third party, can act as the same stakeholder. Mobile Payment Models Mobile payment models can be characterized based on some important features, such as: payment amount, payment settlement mechanism, and the technologies which support the complete m-payment system. There are four primary models for mobile payments: 1. Premium SMS based transactional payments 2. Direct Mobile Billing 3. Mobile web payments (WAP) 4. Contactless NFC (Near Field Communication) 5
1. Premium SMS / Premium MMS In the predominant model for SMS payments, the consumer sends a payment request via an SMS text message or an USSD to a short code and a premium charge is applied to their phone bill or their online wallet. The merchant involved is informed of the payment success and can then release the paid for goods.
Here is the typical end user payment process: -User sends SMS with keyword and unique number to a premium short code. -User receives a PIN (User billed via the short code on receipt of the PIN) -User uses PIN to access content or services.
Inhibiting factors of Premium SMS include: Poor reliability - transactional premium SMS payments can easily fail as messages get lost. 6
Slow speed - sending messages can be slow and it can take hours for a merchant to get receipt of payment. Consumers do not want to be kept waiting more than a few seconds. Security - The SMS/USSD encryption ends in the radio interface, then the message is a plaintext. High cost - There are many high costs associated with this method of payment. The cost of setting up short codes and paying for the delivery of media via a Multimedia Messaging Service and the resulting customer support costs to account for the number of messages that get lost or are delayed. Low payout rates - operators also see high costs in running and supporting transactional payments which results in payout rates to the merchant being as low as 30%. Usually around 50% Low follow-on sales - once the payment message has been sent and the goods received there is little else the consumer can do. It is difficult for them to remember where something was purchased or how to buy it again. This also makes it difficult to tell a friend. 2. Direct mobile billing The consumer uses the mobile billing option during checkout at an e-commerce site-such as an online gaming site-to make a payment. After two-factor authentication involving a PIN and One-Time-Password, the consumer's mobile account is charged for the purchase. It is a true alternative payment method that does not require the use of credit/debit cards or pre- registration at an online payment solution such as PayPal, thus bypassing banks and credit card companies altogether. This type of mobile payment methodprovides the following benefits: Security - Two-factor authentication and a risk management engine prevents fraud Convenience - No pre-registration and no new mobile software is required. Easy - It's just another option during the checkout process Fast - Most transactions are completed in less than 10 seconds Proven - 70% of all digital content purchased online in some parts of Asia uses the Direct Mobile Billing method 7
3. Mobile web payments The consumer uses web pages displayed or additional applications downloaded and installed on the mobile phone to make a payment. It uses WAP (Wireless Application Protocol) as underlying technology. Benefits include: Follow-on sales where the mobile web payment can lead back to a store or to other goods the consumer may like. These pages have a URL and can be bookmarked making it easy to re-visit or share. High customer satisfaction from quick and predictable payments Ease of use from a familiar set of online payment pages Unless the mobile account is directly charged through a mobile network operator, the use of a credit/debit card or pre-registration at online payment solution such as PayPal is still required just as in a desktop environment. Direct operator billing Direct operator billing, also known as mobile content billing, WAP billing, and carrier billing, requires integration with the operator. It provides certain benefits: The operators already have a billing relationship with the consumers, the payment will be added to their bill. Provides instantaneous payment Protect payment details and consumer identity Better conversion rates Reduced customer support costs for merchants
4. Contactless Near Field Communication Near Field Communication (NFC) is used mostly in paying for purchases made in physical stores or transportation services. A consumer using a special mobile phone equipped with a smartcard waves his/her phone near a reader module. Most 8
transactions do not require authentication, but some require authentication using PIN, before transaction is completed. The payment could be deducted from a pre-paid account or charged to a mobile or bank account directly. Mobile payment method via NFC faces significant challenges for wide and fast adoption, due to lack of supporting infrastructure, complex ecosystem of stakeholders, and standards.
There are four potential mobile payment models: 1. Operator-Centric Model: The mobile operator acts independently to deploy mobile payment service. The operator could provide an independent mobile wallet from the user mobile account(airtime). A large deployment of the Operator-Centric Model is severely challenged by the lack of connection to existing payment networks. Mobile network operator should handle the interfacing with the banking network to provide advanced mobile payment service in banked and under banked environment. Pilots using this model have been launched in emerging countries but they did not cover most of the mobile payment service use cases. Payments were limited to remittance and airtime top up. 2. Bank-Centric Model: A bank deploys mobile payment applications or devices to customers and ensures merchants have the required point-of-sale (POS) acceptance capability. Mobile network operator are used as a simple carrier, they bring their experience to provide Quality of service (QOS) assurance. 9
3. Collaboration Model: This model involves collaboration among banks, mobile operators and a trusted third party. 4. Peer-to-Peer Model: The mobile payment service provider acts independently from financial institutions and mobile network operators to provide mobile payment. For example the MHITS SMS payment service uses a peer-to-peer model.
Conclusion
Mobile Payments represent an opportunity for operators that they can ill afford to ignore. However, when assessing whether to enter this segment, MNOs need to very carefully consider which mode of payment they would like to implement, be it NFC/RFID based, SMSbased or WAP-based. At the same time they need to look at the markets for the various relationship models and then decide whether they would like to enter the B2B, B2C, C2C or P2P segment.
While reviewing the kinds of payment to target micro or macro operators need to keep in mind that while customers might be willing to embrace micro mobile payments much faster than they would in the case of macro payments, it might result in a low value-large volume scenario. Such a situation might place a strain on network resources but not bring in the anticipated revenues. However, in the case of macro payments, while the potential revenue might be high, users might not be as willing to switch to mobile payments, hence resulting in slow uptake of the technology.
In addition to the above, while deciding on whether to implement remote or in-store mobile payment methods, the investment involved needs to be kept weighed against the potential gains that a particular implementation method can bring in.
Also, while deciding on the implementation models, operators need to keep in mind the relative position of the telecom operators and financial institutions in the particular market before opting for a particular implementation model. 10
Finally, to ensure that mobile payments live up to expectations worldwide, operators need to make mobile payments widely accepted by merchants so as to speed up user uptake of these services.
Reference
Fourati, H. Ayed, and A. Benzekri. A SET based approach to secure the payment in mobile commerce. In Proceedings of the Annual IEEE Conference, November 6-8, 2006
Romao and M. da Silva. An agent-based secure internet pay- ment system. Lecture Notes in Computer Science,2008
R.L. Rivest and A. Shamir. PayWord and Micromint: Two sim-ple micropayment schemes. Cryptobytes, 2008