Payforit

A great idea for mobile payments has been typically cocked up by the mobile networks money-grabbing approach.

What is Payforit
In short, it is a Wap-based mobile payment system. It works in a similar way to Premium SMS by deducting a payment off the user's phone bill, but is triggered via a wap site, rather than an SMS.

There are two key advantages of Payforit:
A simple click that can be built into a WAP browsing experience
Payments for up to £10 can be taken

This is exactly the kind of thing that I would love to include in our mobile content management platform, immedia24.com

However there are downsides:
The number of mobile users with WAP is small - the latest figures from text.it show WAP browsing levels at around 27% in the UK.
The cost to merchants of offering payforit and the amount that the networks take from each payment.

This last point is the one that will prevent Payforit from being truely ubiquitous. In terms of setting up as a merchant I have been quoted between £250 per month and £1500 per month depending on who you ask. For a new payment system in a relatively new market this is nothing short of outragous. Who would be in a position to risk this, apart from large brands with money to burn?
Similarly the networks are taking a similar chunk of money to Premium SMS - it varies according to the amount taken, but merchants will see little more than 50 or 60% of the payment value after VAT and Network charges.

Compare this to online payments systems such as Paypal or Google checkout, as you will see that they take a relatively small fee for transactions. Even online credit card processors such as Worldpay or Protx charge a small amount each month to their users.

Once again, the networks just don't get it. All they have to do is charge a small amount per transaction and the Payforit system will become a genuine mobile payment system for all.

Chiltern Railways has become the first train company in the UK to sell mobile phone tickets to their passengers.

Passengers can buy Chiltern’s £5 online Eday ticket for journeys between London Marylebone and Birmingham Moor Street or Stratford –upon-Avon via the website www.chilternrailways.co.uk. The Eday ticket is available only on certain off peak trains.

Passengers receive their ticket in the form of a barcode sent directly to their mobile phone by an MMS. Staff on board the train and at the station will be able to check the ‘mobile ticket’ with barcode scanners. If the phone can't display the barcode then the journey details can still be read in text only format.

Commercial Director for Chiltern Railways, Neil Micklethwaite said: “We are happy to be leading the industry as the first train company in the United Kingdom to sell this new format of mobile phone ticketing to our passengers. We have listened to our passengers and what they want is a simpler and easier way to purchase tickets for their travel. "

“The next step is to install new scanning gate technology at Marylebone station which will allow passengers with mobile phone tickets to scan their own ‘mobile tickets’ as they walk through the ticket gates,” Mr Micklethwaite said. Cubic Transportation Systems is supplying Chiltern Railways with the new gate technology, due for installation next month.

Mobile phone ticketing is now available for Chiltern passengers for the next three months with the aim of develop this as a service permanent. Ticket purchases on the move from mobile phones will be possible at a later stage, as well as through the internet .

For more mobile ticketing see txt4ever

Immedia 24

Our new site, Immedia 24 is up and running. The aim of this is to allow anyone to publish content to mobile phones, quickly and easily.
It's a web based system that manages keywords, shortcodes and the files themselves. It also creates web previews for users to browse.

Paypal Mobile

After some months of chasing I finally got to email someone at Paypal Mobile about how we can integrate their product into our SMS/Mobile Content Management system.

Unfortunately they are not remotely interested. I was told that:
"Paypal Mobile is focussed on the retail sector for real products and macro payments, rather than mobile content, text messages or downloads."

OK, fine, so how about using mobile phones to pay for these 'real' products then?

I was told:
"We can only take payments via a website. WAP payments will not be enabled until early 2007 at best." And I believe there are no plans to allow payments by SMS.

I find this all very disappointing. Developers such as ourselves are looking for mobile payment systems that don't have the costs and problems of network based PSMS. Here are Paypal, with the ability to provide a killer application for mobile payments but they're not interested.

Mobile Micropayments

There has been a debate on one of the mobile forums recently about the best way to take micro-payments on mobile phones.

Micro payments are becoming more important as mobile users need to pay for small items - ringtones, wall papers or even content, such as music.

There are essential 3 options:
Premium SMS
Credit Cards
Non-operator billing

Premium SMS
Pros
It's easy, seamless and fast - you can take a payment and deliver content in a single message
Cons
The operators take a large chunk of the money (around 30% depending on the tariff)
It's not world wide (you need codes for each country)

Credit Cards
Pros
Fairly universal and you can take from small to large amounts
Cons
Difficult from a user perspective on mobile. It requires either web access or a difficult and time consuming WAP site

Non-operator billing
These are systems where mobile users will purchase some kind of 'credit' using credit cards or paypal
Pros
Can be universal, better payouts for content providers
Cons
Require pre-registration

All in all, in spite of it's problems, premium SMS is the best method for delivering content, simply because it's the one that mobile users will actually use.

There are additional problems, however:
in the UK premium SMS does not support WAP push
UK mobile networks additionally charge for the data

Premium SMS

Using PSMS
The mobile user must first make a request by text from their phone to the charging number. A reverse charge SMS is sent back -� it is this action which actually deducts the fee from the users phone.
Both the price and process limits how mobile content may be charged � it cannot operate in the same way as credit cards on a website, where a user selects items into a shopping cart and the sum is billed at the end. It also means that charging an existing customer for further content is more complex. For example if you want to charge for access to more content which is accessed from a web or wapsite the user will have to send a new text message.
On the plus side for providers (but not necessarily for the user), reverse charge billing does have a recurring options � so the content provider could, for example, charge a user �1 daily. This starts from a single message requested by the user and ends when they request it to stop.
Inevitably this type of billing system dictates the pricing model for mobile content. In other words, you need to think about how you charge for things. Subscription models lend themselves well to mobile content � the ideal type of application is content that regularly changes.
Although some mobile content is clearly successful � ringtones is now a larger market that CD single sales � there are still massive opportunities for developing new content that will catch the imagination of mobile users.

Delivering Content/Media/Information
There are a number of options for getting information/media onto phones: SMS, MMS, WAP, WAP push or HTML.
Although much maligned after its first introduction, WAP is a very useful tool for delivering content to phones. Most modern phones have WAP/GPRS which it makes it easy to access any type of content: text, pictures, video or music. The increase in 3g phones should make this easier.
Building and hosting a WAP site is relatively straight forward and there are even content management systems available that can manage it. The only downside is that it may be a pain for users to access a bookmark through GPRS.
Once you have your content then its simply a case of sending the URL of the WAP site with the SMS billing message.
Alternatively for text content, it can be sent as an SMS � either with the billing message or as a separate SMS. If it is a small bit of information then this is the easiest method.
MMS has the advantage of being able to deliver any type of content directly to the users phone. The problems with MMS are cost � 30p per message � and compatibility.
Increasingly, HTML � a website � is a an option for many content providers. Many phones can now browse HTML and can provide information in a stripped-down form. Still, HTML (or compact HTML) are really only useful for users with larger screens and PDA-style phones.

SMS Gateways
So youve worked out how youre going to deliver the content, the next thing is to get that from the internet to the mobile phone network. For this youll need an SMS gateway. These are provided by the reverse SMS billing provider and is essentially a gateway through which http requests can be sent and received. The gateway will consist of a series of servers with gsm modems which deliver the information to the networks and then each user.
Although its not necessary to need to know about the way that the gateway talks to the networks, there will be an issue with how you integrate your content with the SMS gateway.
This varies depending on the provider � some only give a raw communications package. They simply deliver the request on to your server and you need to set up your server to with the appropriate response.
Other gateway providers will take a more user-friendly approach whereby you provide them with a simple URL and they will manage the integration to ensure it gets delivered to the user.
Protecting your content from non-paying users is another complexity that providers of wap-based content will need to deal with. There are a number of methods of doing this such as issuing each user with a name and password (time consuming for the user) to generate an individual URL for the user sent as a bookmark.
This is where delivering content by SMS (or MMS) may be easier. The gateway will still need to collect the content from a place on your server (usually with a simple password protection) and sent it directly to the mobile customer.

PSMS Payouts
The advantage of reverse SMS billing is its simplicity. That and the fact that mobile users accept the principle of premium rate charges on their phones. The disadvantage for the content provider is the amount taken by the networks. For a start all billings are including VAT, so the government will take 17.5% for starters. The networks also take a much higher percentage than, say a credit card processor. Then the billing providing company will also take a small share. The revenues offered by each network varies and many processors average this out across all of them. So after everyone has taken their wedge the most a content provider can expect to receive is 55%. Where the billing provider provides a lower set-up and monthly cost along with easy integration then the share of the revenue will be lower.

Other payment options

It is possible to use premium rate voice calls as a method of charging for mobile content. IVR, as it is known, can operate whereby so that the customer phones the premium rate number and will be given a reference code to log-in to a web or wapsite. The problem is that this method of billing is not popular with customers � the extra problems with making the call and then noting a reference number is off-putting. If IVR was a successful method for charging for content then it would have been successfully used on the internet.
The most obvious alternative to Reverse SMS billing is credit cards. Whilst this it is entirely possible to process credit card details by a secure WAP connection it is fairly cumbersome to the mobile phone user. Generally most mobile phone content is relatively cheap � pretty much a micro-payment � credit cards are a complicated and expensive way to handle these. Although a number of providers outside the network operators are looking at electronic wallets that will enable micro payments to be made quickly and cheaply these are far from a reality for most users.
One great advantage of reverse SMS billing by a shortcode is that it has a built-in marketing function. Typically advertising will state text KEYWORD to SHORTCODE and thats it � both the payment and content can be taken care of through one simple point of entry. With mobile content directories still in their infancy, asking users to type in a URL is probably too complex to be effective.

Paypal Mobile
One system that could become the killer application for mobile payments is Paypal Mobile. They now allow users to attach a mobile number as well as an email address to make payments to and from their account. However, the biggest problem with this, is that Paypal are not interested in SMS or mobile based billing systems. The latest word is that it wont be for some time to come!

Regulations
The telecoms business and phone billing in particular is a tightly regulated area and content providers need to be prepared to abide by these.
Already mentioned is that you can only send a reverse charge to the same number that the users request has come from.
Certain short codes must be used for adult content. Last year the networks agreed to restrict certain content to ensure that it could not be viewed by minors. These numbers are the ones that begin with 89. In order for a mobile user to get content from these numbers they must first register their phone as belonging to someone over the age of 18.
Reverse charge billing can only be used to charge for content that is delivered to the users phone or available on the web. You could not use it for mail order items, for example.
The price and frequency of the numbers must be correctly advertised. There are certain statements that must clearly be made on any publicity material, and where this includes recurring charges, the stop keyword must also be stated. ICTIS the telecoms regulatory body has more details covering this on their website.