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For several years there has been a growing acceptance that for m-commerce to reach its full potential, some fundamental issues need to be resolved in the field of mobile payment.
Existing payment methods have done a great job in taking the industry to where it is today. Mobile operator portals are currently responsible for a large slice of m-commerce with more than 10million European consumers making use of them. They are succeeding by providing a significant amount of compelling content to consumers, in an easy-to-access fashion.
But as the mobile internet has expanded and developed, content providers are wanting to push beyond the portals and give consumers access to the entirety of their content directly. More and more consumer brands are setting up their own direct-to-consumer mobile internet sites. Recent examples include MTV and The Sun newspaper.
It’s not surprising that they should want to do this, as portals can only ever offer a finite amount of space. For every piece of content that operators put on a portal, there are a thousand other items that could be usefully offered to consumers. There are also particular types of content, such as adult services, that some operators may not want to be directly associated with.
Premium rate SMS has proved a great success story for the industry and a fantastic mechanism for text based purchases, such as voting and chat. However, PRSMS was never designed as a payment solution, and it is struggling to serve the needs of today’s operators and content providers. The lack of such fundamentals, such as common international short codes, a refund-mechanism, standard terms and conditions and fixed price points cause major headaches.
The problems with existing payment methods led to the formation of Simpay in 2003. Simpay’s primary goal is to drive mobile commerce forward through the development of a universal, open and interoperable system of payment and a strong, easily recognised common brand name. Simpay will operate as a not-for-profit organisation, fully owned by its mobile operator members, which already includes some of Europe’s largest operators – Amena, Orange, Proximus, Telefónica Móviles, T-Mobile and Vodafone. Membership is open to all operators.
At the 3GSM show in Cannes in February, Simpay announced that its services will first become available in the Spanish market this summer, with subsequent launches taking place in the UK and Belgium by the end of 2005. Further announcements are expected later on in the year for other European countries launching during the course of 2006. The commercial launch of Simpay means that more than 70 million mobile consumers across Europe will have the option to purchase goods and services via the scheme by the end of 2005.
At launch, Simpay will focus on facilitating micro-payments of under 10 euros for digital content, both on the mobile phone and the PC. Digital content that will initially be available includes java games, ringtones, logos, video clips and MP3 files.
For content providers, Simpay is good news. Gone will be the days of complex commercial arrangements with multiple operators. Content providers will be able to transact with all consumers from all participating Simpay member operators, regardless of geography, via a single commercial deal, a single point of settlement with full transaction data, and a guarantee of settlement under-written by the operator. Mobile operators and some other third parties will play the role of ‘merchant acquirer’ and thus will be responsible for recruiting content providers into the scheme.
A classic example of how the system will work is when a consumer finds their way to a WAP site or a mobile web site, and they decide they want to purchase something relating to the latest blockbuster movie. Once they have decided on the image or clip they wish to purchase, they see the Simpay logo, which they will recognise in the same way as they would the Visa or MasterCard logos. They click on this and, provided there are enough funds in their mobile phone account, the purchase is delivered. The cost of the transaction will be added to the consumer’s mobile phone bill or deducted from their pre-pay account.
Simpay is a sophisticated payment scheme and supports multiple currencies. So a UK consumer can purchase a Manga comic from a Japanese content provider priced in Yen and have it deducted from his operator bill in sterling.
Revenues in Western Europe from mobile content such as logos and ring tones are already estimated at E2.7 billion, with forecasts by ARC Group of worldwide mobile payment revenues growing to $20 billion by 2007. By providing a secure, trusted, easy to use payment scheme that is open to all, Simpay is set to be a major catalyst in this growth. Just by focusing on micro-payments, Simpay forecasts that it will stimulate over EUR1billion of extra industry revenues by 2007. Author:
Jim Wadsworth is CMO of Simpay
Information:
w: www.simpay.com
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