mobile payment

Mobile Payment

Assoc.Prof. Dr. Thanachart NumnondaDirectorSoftware Park Thailand22 November 2010

Agenda

Mobile Financial Services

Banking 2.0

Mobile 2.0

Mobile Banking

Mobile Payment

M-Payment Technology & Applications

Security

Examples

Suggestion & Conclusion

Mobile Financial Services

The convergence of payments and mobile communications is not just logical

– it is inevitable”

John Philip Coghlan, Visa USA CEO March 2007

What is Mobile Financial Services ?

Source: Mobile Payment series 2009: www.mpayconnect.com

Mobile Financial Services Video

Mobile Payment Platforms • Mobile Banking: This will enable users to transfer money from account to account, pay bills, manage/monitor account e.g. spending limits, credit fraud. . e.g. Mobile banking platform providers – Promptnow, mFoundry and Firethron.

•Remote Purchase: Using the mobile phone to purchase goods through a secure portal, instead of a computer on the internet. e.g. PayPal’s "Text-to-Buy" enables users to make remote purchases.

Person to person mobile payments: Where a mobile device can be used to complete a person-to-person transaction.

Point-of-Sale: Using a mobile device at a physical store front, at the cash register to purchase inexpensive products quickly and easily. “

Mobile Money Transfer1.7 Billion unbanked mobile users (2012)

Business Model

Operators’ involvement

Banks’ involvement

Independent serviceprovider models

Low High

High

Low

Collaborative ModelsBank-Centric Models

•Point-of-sale NFC payments•Mobile Banking - Multiple BanksCustomer->Bank->Vendors

Operators

Customer->ISP->MerchantsOperators

Customer->Mobile Operator->MerchantsBanks

Operator Centric Models

Mobile Payment Evolution

What does it take to replace cash?

Banking 2.0

Technology & Social Shift

New Business Rules Communication Shift Social Networks Socializing & Sharing

ผลกระทบของ Internet ต่อ Bank การทำธุรกรรมของลูกค้าธนาคารมีการเปลี่ยนแปลงอย่างมากโดย

ระบบอินเตอร์เน็ต ภาคการเงินจะเป็นกลุ่มอุตสาหกรรมรายแรกๆที่นำระบบ Internet

เข้ามาใช้กับลูกค้า ลูกค้าสามารถที่จะทำธุรกรรมการเงินผ่านระบบอินเตอร์เน็ต

การทำธุรกรรมของลูกค ้า การตรวจสอบบัญชี การโอนเงิน การชำระเงิน การลงทุนในกองทุนรวม บริการบัตรเครดิต การลงทุนในตลาดหุ้น

Internet Banking : Example

Farmer Internet Banking Advertise

การชำระเงิน

State Bank of India

Social Finance

Social Lending is already Global

The Bank of Facebook

Did you know Bank 2.0?

Branch of the Future

Mobile 2.0

Next Major Computing Cycle

Source: Morgan Stanley 2009

Source: Morgan Stanley 2010

Tablets

SmartPhones

New Trends

Web 2.0

Web as a Platform

OS/Device independence

Large scale computing

Software as a Service

Cloud Computing

4 Billion Mobile Phones

Mobile 2.0

Smartphone v.s. PC

Mobile .0

3G Network

PricewaterhouseCoopers 24 August 2010Slide 40

IT Trends and Social Impact

Mobile 2.0

4G Advertise

WiMax

• เป็นโปรโตคอลสำหรับ fixed and fully mobile internet access.

• ความเร็วสูงถึง 40 Mbps และถ้าเป็นมาตรฐาน IEEE802.16m มีความเร็วถึง 1Gbps สำหรับ fixed speed

• สำหรับมาตรฐานของ Wi-Fi คือ IEEE802.11

• WiMax เป็นระบบแบบระยไกล สามารถครอบคลุมได้หลาย ก.ม.

Speed Comparison

WiMax Advertise

Mobile Banking

Mobile Banking : Example

Bank of America Advertise

Mobile Payment

Some Key ConceptsMobile Remote Payment It covers payments that take place online, in which the mobile phone is used as a device to authenticate personal information stored remotely

Mobile Proximity Payment It refers generally to contactless payments in which the payment credential is stored in the mobile and is exchanged over the air, based on NFC technology, with a dedicated and compatible payment terminal.

Near Field Communication It is a short-range radio frequency communication technology that enables NFC devices located no more than a few centimeters from each other to exchange data. NFC devices are totally compatible with existing contactless technologies like smart cards and contactless stickers.

Source : Binary Mantra Systems

Mobile Payments 1.0 in Europe 2000-2005

Many early European mobile payment initiatives have failed – Main reasons for failure are lack of usability and lack of availability

Mobile payments 1.0 in Europe is dominated by Premium SMS – 20%-40% revenue share for telecom operators

– In 2006 1 Billion Euro purchased through Premium SMS

– Used by 60% of young consumers

Increasing consumer acceptance in niche areas such as m-parking

– In Croatia more than 50% of all parking fees are paid by mobile phone .

Europe is far behind Japan and South-Korea

Source : Status of Mobile Payments RFID : Europe 2007

Contactless M-Payment in some countries

Source: Contactless Mobile Payment: ITIF Report 2009

Growth of M-Payment acceptance in Japan

Mobile Payment Japan Video

Mobile Payment Taiwan Video

Mobile Payment 2.0 : 2006- 2010

Physical

payments

NFC based

Remote

payments

Mobile

banking

Person

To PersonPublic

Transport

Access

ControlTicketing

NFC Applications

Mobile Payment Applications

Bank’s Perspective

Mobile Network Operator’s Perspective

Physical

payments

SMS based

Identification

Authentication

Transport

Cards

Contactless

paymentsContactless cards

Mobile devices

Digital

payments

Mobile Payment Value ChainEnd Customers – More convenience

Operators - They have fared well in becoming part of mobile commerce transactions where the items being sold are delivered on the mobile devices (Ring tones, wall papers, etc..). Most of the discussed payment systems do not benefit an operator beyond driving increased usage of SMS and data services. Revenue share model from Near field communication (RFID) payment would be a challenge.

Merchants and Vendors - If already registered on eBay, merchants may provide remote purchase or text-to-pay but brick-and-mortar merchants will need to see reduced transaction and implementation cost, and access to precious customer data to track spending habits.

Source: Mobile Payment Value Chain Slideshare.net

Mobile Payment value ChainTechnology Vendors - Opportunity to sell mobile payment products and expert advice to operators and financials institution. Independent service providers will have to establish trusted brands before they will ever get any money.

Device Vendors - Opportunity to sell mobile payment products and expert advice to operators and financials institution.

Financial institution- Financial transaction fees

Source: Mobile Payment Value Chain Slideshare.net

Mobile Payment Market

1 Billion Unbanked Users

M-Payment Technologies & Applications

Mobile Payment Technologies

Near Field Communication (NFC) : is an evolution of contact-less and short range RFID technologies.

FeliCa : Sony developed the FeliCa integrated circuit chip for contactless payments made via smart cards

SMS: Text based transaction

Over the air data connectivity: Https, SSL, web browser, XML. Security is comparable to the internet model.

Technologies Behind NFC

Contactless payment readers

Network connecting them to transaction processors

NFC-equipped phones

Network for providing mobiles with personal account information

Software for mobile device UI and back end server application.


RFID

RFID : Radio Frequency Identification

RFID Tags: Store and retrieve data (with a distant reader)

History : radar technology, cow identification (year 1970).

Use case examples: road taxes, trace books in libraires, access card, shops (Wall-Mart).

RFID tags types– Active

– Passive (without battery)

Source : ARCHITECTURE & DEVELOPMENT OF NFC APPLICATIONS Smart-University 20099

From RFID to NFC

Can communicate with objects

Magnetic field induction

Contactless technology based on RFID 13,56MHz

NFC is standardized ECMA-340 and ISO/IEC 18092

Backward compatibility with ISO14443 and SmartCard

Millions of readers

Easy to use


Contactless Cards

FELICA (sony) encryption key

– generated dynamicaly at each auth.

Topaz Tag Innovision

MIFARE Standard:

– 512bits UL (no security) used for tickets

MIFARE DESFire

– preprogrammed card

– Example: Oyster Card in London

Gemalto: Mifare 4 Mobile

Contactless Java Card


Visa Paywave Video

MasterCard Paywave Video

NFC

NFC allows a device to read and write a contactless card, act like a contactless card and even connects to another NFC device to exchange data.

3 modes :

– Card reading (MIFARE …)

– Peer to peer (initiator & target)

– Card emulating

Distance : 0 - 20 centimeters

Bandwidth to 424 kbits/s

NFC Forum : NDEF specs

N-Mark: http://www.nfc-forum.org/resources/N-Mark


Near field communication (NFC)

NFC is a type of radio frequency identification (RFID) technology

NFC standard is an extension of the ISO 14443 RFID proximity-card standard.

NFC communicates via magnetic field induction

Japan and South Korea use RFID standards that are not currently interoperable with NFC standards. Japan uses FeliCa, a proprietary standard. South Korea uses a passive

Serviceprovider

Trusted ServiceManager (MNO or TTP)

Application owner

SIM Card Manufacturer(Smart Card provider)

Card Issuer MNO(SIM Card management system)

Contactless service management platform

OTA NFC Service Management

PO

S

SIM

NFC

Mobile station holder

NFC on a Mobile Phone

Contactless

Screen with a user interface

Security

GPS

Loudspeaker and Microphone

Keyboard

Camera

Network

TV


Contactless Payment Applications

Payment Transaction

Payment and Information-Based Transaction

Authentication / ID


Payment TransactionMobile payments replace cash/ credit cards

No information component required beyondexchanging payment details

Includes contactless payments for goods and services purchased from:

– Big Box Retailers

– Quick Service Restaurants

– Convenience Stores

– Taxis

– Automated Devices


Payment & information-based transactions

Transactions involving exchange of both payment details and information pertain- ing to the transaction. Data component is stored on mobile phone’s electronic walllet.

Enables mobile phones to replace cards, tickets, passes, etc.

Enables personalized merchandising and advertising

Uses mobile phone’s electronic wallet to manage, update, pay for, or check into:

– Public Transit (Tickets)

– Airport Check-in (Tickets)

– Parking Garages (Tickets)

– Movie Theatres (Tickets)


Authentication/IDAuthentication/identification credentials are stored in the

mobile phone’s electronic wallet

Electronic wallet can be used as ID to check into:

– Schools

– Hotels

– Health Clubs

– Office Complexes

– Apartment


Paypal M-Payment Library

Make it easier for developers– Library design to be integrated less

than 5 mins

Make it better for customers– More convenience than entering

credit card

– Don't need to share financial information

A growing feature set– Payment settled immediately to

PayPal account

Paypal M-Payment Video

Security

SMS SecurityThe initial idea for SMS usage was intended for the subscribers to send non-sensitive messages across the open GSM network.

Mutual authentication, text encryption, end-to-end security, non-repudiation were omitted during the design of GSM architecture.

– SMS Spoofing

– SMS Encryption


GPRS Security

GPRS security functionality is equivalent to the existing GSM security.

GPRS solutions are already in use for mobile payments across the globe. Application level security should be used to provide end to end transaction security. Even though most of the mobile phones support GPRS, not all the phone user activates the GPRS connection


Security &memory for RFID tags vs cost


National ID card

Aircraft part tag

Passport label / page

Secure access or credit card

Transit cardTransit

ticket

Library book labelItem

drug label

Retail pallet/ case label

Specification typically ISO 14443 or

15693 (read distance to 50 cm)

7cents Chip cost 3dollars

Security and/or memory size

Industry Groups

http://www.mobilepaymentforum.orghttp://www.openmobilealliance.org

http://www.mobiletransaction.org http://www.mobeyforum.org

http://www.mobilepaymentforum.org/

http://www.mobilepaymentforum.org/

http://www.openmobilealliance.org/

http://www.mobiletransaction.org/

Use cases Examples

The Indian Scenario

Currently registered no. of m-payment users is close to 3.5 million users

Two types of payment systems are in use at present;– Text/SMS based service – Paymate, mChek,

Obopay

– GPRS based service – JiGrahak

In next 3 years, the number is expected to grow to 9 million users due to increase in quality and adoption of handsets


NFC on iPhone

http://www.nearfield.org/

NFC already on iPhone:Stickers, 30-pin RFID readers, SIM add-on…


http://www.nearfield.org/

Exchange data, P2P

Configuration (bluetooth pairing)

Vending machines, service maintenance

Loyalty, couponing

NFC poster, get information

Ticketing

Medical, home care

Web applications

Payment solution

Access control

Mobile signature

Etc.

Added value services


NFC Use cases


Mobile Ticketing

A customer books two tickets for a concert.

He pays and downloads his tickets on his mobile phone with a simple touch.

He meets with his girlfriend and transfers the ticket on her mobile.

They arrives and unlock security gates thanks to their NFC mobile phone.

14 millions RFID tickets were produced by ASK for Olympic Games in China - http://www.ask-rfid.com

Mobile tcketng will become more popular over the next few years, with 2.6 billion tckets worth $87 billion, delivered by 2011

Juniper Research (April 2008)

http://www.ask-rfid.com/

NFC in the World (2009)http://www.nearfieldcommunicationsworld.com

Japan with Sony FeliCa, NTT DoCoMoNTT Docomo reports 10 million mobile credit card customers

StoLPaN « Store Logistics and Payment with NFC » is a pan-European consortium supported by the European Commission’s Information Society Technologies program: http://www.stolpan.com

Akbank and Turkcell test NFC in Istanbul

Visa launches NFC trial in Brazil

Citi launches NFC trial in India

Telefónica launches O2 Money, says it is ready to deploy NFC

Nokia Money

41 NFC-related trials and launches in the Asia-Pacific region so far…

etc.Source : ARCHITECTURE & DEVELOPMENT OF NFC APPLICATIONS Smart-University 20099

http://www.nearfieldcommunicationsworld.com/

http://www.stolpan.com/

NFC in France(2009)

Disneyland Paris to test NFC and contactless cards from October 2009, with Crédit Mutuel and CIC banks.

Smart-Park with VINCI Park and Monext.

Paris Metro: Paris transport operators to launch NFC ticketing from the end of 2010. STIF will coordinate the Paris transport operators (Optile, RATP and SNCF Transilien) and the participating telecoms operators (Orange, Bouygues Telecom and SFR).

Pegasus workgroup: multi-operator (Orange, Bouygues Telecom, SFR), multi-bank (BNP Paribas, Groupe Crédit Mutuel-CIC, Crédit Agricole, Société Générale) with MasterCard, Visa Europe and Gemalto for mobile payment in two cities: Caen and Strasbourg

Nice NFC cityhttp://www.afscm.org/entreprises/nice-ville-nfc


http://www.afscm.org/entreprises/nice-ville-nfc

Case Study: NFC Transport Ticketing in Hanau and Frankfurt

• Description:NFC based ticketing for public transport passengers in Hanau and Frankfurt. Now expanding into broader information, loyalty, payment and ticketing applications, for example with the Erlebnis card

• Start: 2005, now commerically available

• Users: Inititially 200, but growing. • Key Words: public transport ticketing• Handsets: Nokia 3220• Operator Vodafone• Chip: NXP• Others: RMV (Rhein-Main-

Verkehrsverbund), T-Systems

Source : Status of Mobile Payments RFID Europe 20099

Case Study: NFC Consumer services in Cinema, Thailand

• Description:

NFC based consumer applications such as information, ticketing and marketing at cinema complex in Bangkok, Thailand

• Start: 2007

• Users: Inititially 200, but growing.

• Key Words: marketing, ticketing

• Handsets: Nokia 3220

• Operator

• Chip:

• Others: PayZy

Source : Status of Mobile Payments RFID Europe 20099

NFC Devices

NFC Phones using single wire Protocol and UICC (08/2008)The Sagem my700XThe LG L600VThe Nokia 6131 SWPThe Motorola SLVR L7

All devices are more or less concept devices and come with an InsideContactless NFC Chip.

In order to develop applications with these devices a Dev Kit (like the Gemalto Developer Suite) and a SWP UICC is required. All four devices are already capable of using SCWS.

http://developer.gemalto.com/download.html

107

Press release: Alcatel-Lucent partners with Clear2Pay for mobile

payment framework

Gateway

Banking

Post Pay Systems

Voucher BO

APIs

Application Correlation Server

Stored Value Accounts Server

Profile server

Subscribers

Points of sale Telco – Non Banking

PingPing SVA

Interactive Billboard

Suggestion & Conclusion

Issues

Trust

Standards

Privacy

Regulation

NFC keys of successReach and availability

The availability of NFC phones and SIM card

Variety of use

Ease of use

See iphone

Security

Be able to lock payment card

Added value services

Advantage for customer ?

Infrastructure

NFC access points in shops

Complex value chain

+ Mobile OTA B2C

battle


Suggestion

Governments should assume a leadership role in promoting and adopting mobile payments.

– Ensure senior government leaders highlight the benefits of contactless mobile payments.

Articulate clear consumer protections for mo-bile payments.

Address legitimate security and privacy concerns, but recognize mobile wallets are likely to be more secure than physical wallets

Encourage competition and do not favor en- trenched interests.


Thank you

[email protected]/thanachartwww.facebook.com/thanachartwww.swpark.or.th

http://www.facebook.com/thanachart