ITEC0722: Mobile Business and Implementation: Mobile Payment

and SecuritySuronapee Phoomvuthisarn, Ph.D.

suronape@mut.ac.th

The Growth of Mobile Payment

http://www.paymentscardsandmobile.com/mobile-payment-transactions-record-27-growth-worldwide-past-four-months/

Outline

• Introduction to Mobile Payment– Definition of M-Payment– Evolution of Payment– Drivers– Key Stakeholders

• Types of M-Payment– Monetary Value– Location– Usage

• Security Challenges

Introduction to Mobile Payment

• Definition– “Use of wireless devices (such as mobile phone) to

make a purchase or other payment related transaction.”

• Mobile Payment (M-Payment) are an important enabling service for other m-commerce services (e.g. mobile ticketing, shopping, gambling…) :

Evolution of Payment

Secure mobile payments getting the balance right, Royal Holloway University of London,Richard Martin, Payment System Security Visa Europe 7 September 2013

1in every

650%

of Visa transactions

Consumer spend on Visa cards

25%Visa spend

Ecommerce +200% vs face-to-face

Mobileby 2020

Visa cards in Europecontactless

€1in every

€6.75

Example M-Mobile methods

• Voice and now also 3G Video calls (IVR)• SMS• MMS• Mobile TV• Mobile Internet• Near Field Communications• Peer-to-Peer

Drivers

• Population of mobiles devices over PC• Mobile devices allowing low cost

and easy access payments (ideal POS)• Mobile apps adding functionality• Mobile operators are looking for new revenue

streams

Key Stakeholders• Providers of mobile payment services

– Financial Institution (e.g. Bank)• Internet Bank & ePayment Services

– Mobile Network Operator• Network Infrastucture• Subscribers

• Demand Sides– User/Consumer

• User of the value added services

– Content Provider/Merchant• Getting Paid

• Low Cost

Types of M-Payments

• Monetary Value– Micro payments – less than 5$– Medium Payments – Between 5$ - 25$– Macro payments - above 25$

• Location– Remote Transaction – SMS, GPRS, Applications, QR Code – Proximity Transaction – Bluetooth, RFID, NFC

• Usage– Mobile-to-mobile payments– Mobile devices as credit card processors– Mobile devices used as credit cards

Remote Transaction

• Web form– Send money from a Visa card to any Visa card,

anywhere in the world, using mobile phone number

• Transactional payments by SMS – the consumer sends a payment request via an SMS

text message or 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

Online Wallet

• The consumer’s electronic wallet—the trusted source of credentials– Files or devices containing payment information,

possibly representations of money– Used for seamless payments, without significant

user intervention

Online Wallet (2)• First payment:

– User registers, inputs their phone number, and the provider sends them an SMS with a PIN

– User enters the received PIN, authenticating the number– User inputs their credit card info or another payment

method if necessary (not necessary if the account has already been added) and validates payment

• Subsequent payments:– The user re enters their PIN to authenticate and

validates payment

Proximity Payment

• Definition:– The trading persons are in the same vicinity.

• Example– Contactless payment– Mobile phone used as PoS device– Mobile money transfer

• Benefits & Challenges– Offline transaction support– Compatibility issues such as interfaces for Infra red– Have some risks, ok for micro payments

Contactless Payment

• Contactless– Use a mobile device to shop conveniently, quickly

and securely in a face-to-face environment

Mobile-to-Mobile Payments

• Merchant applications allowing instantaneous transfer of funds from one account to another via smartphone

• Examples:– Paypal Bump

• Bump phones together to receive account info• Or enter email address to download appropriate account info• 1.9% - 2.9% + $0.30 transaction fee

Mobile Payments powerpoint::Kristen Meyer, PharmD Candidate, University of Charleston School of Pharmacy, PCCA CPMS Intern, January 3, 2011 – February 3, 2011

Mobile Devices as Credit Card Processors

• Square, Inc.– Device acts a mini credit card reader inputting

pertinent transaction information into the phone through Square App

– Cost: 2.75% + $0.15/card swiped; 3.5% +$0.15/card keyed in

• Intuit– Mobile credit card reader– Cost

• Low Volume: $0/month, 2.7% + $0.15/swipe, 3.7% + $0.15/keyed in

• High Volume: $12.95/month, 1.7% + $0.30/swipe, 2.7% + $0.30/keyed in

allaexpression.com

http://www.multicellphone.com/category/mobile-payment/page/2/

Mobile Payments powerpoint::Kristen Meyer, PharmD Candidate, University of Charleston School of Pharmacy, PCCA CPMS Intern, January 3, 2011 – February 3, 2011

Mobile Devices as Credit Cards• Near Field Communication (NFC) Technology

– Allows consumers to wave their mobile phone over a point of sale terminal to purchase retail items

– Thought to threaten the existence of the wallet• Companies set to launch pilot programs:

– PayPass/PayWave– Google Wallet– ISIS (partnership between AT&T, Verizon Wireless, T-Mobile, Discover Financial Services and Barclays)

• Costs:

– Approximately $200/reader – you can use Google as your new payment processor, with

transaction fees starting at 1.9 percent

news.softpedia.com

Mobile Payments powerpoint::Kristen Meyer, PharmD Candidate, University of Charleston School of Pharmacy, PCCA CPMS Intern, January 3, 2011 – February 3, 2011

NFC Payments: Fast and Simple – Touch to Pay

Mobile Payments powerpoint::Kristen Meyer, PharmD Candidate, University of Charleston School of Pharmacy, PCCA CPMS Intern, January 3, 2011 – February 3, 2011

Security Challenges

• Sharing sensitive financial information via mobile devices.

• Application installation cannot be controlled.– new attack for malware to steal customer data

• Compared to PC, smartphones were not originally designed for data security.

Reference• http://www.paymentscardsandmobile.com/mobile-payment-transactions-record-27-

growth-worldwide-past-four-months/• http://en.wikipedia.org/wiki/Mobile_payment • http://www.businessnewsdaily.com/4457-mobile-payment-solutions.html • Mobile Payments powerpoint::Kristen Meyer, PharmD Candidate, University of Charleston

School of Pharmacy, PCCA CPMS Intern, January 3, 2011 – February 3, 2011

• Status of Mobile Payments, Eelco de Jong, 19 September 2007