Secure Mobile Payment Service Mobile

Secure Mobile Payment Service Mobile payment is paying for goods or services with a mobile device such as a phone, Personal Digital Assistant (PDA), or other such device. They can be used in a variety of payment scenarios. Typical usage entails the user electing to make a mobile payment, being connected to a server via the mobile device to perform authentication and authorization, and subsequently being presented with confirmation of the completed transaction.

Secure Mobile Payment Service (SEMOPS) is a project for developing a secure, universal electronic payment service, which allows real time payment transactions independently of the type and value of the purchase. Many experts consider mobile payment as the next "big thing" that will empower existing e-commerce efforts and unleash the true potential of mobile business. Different approaches have come to the market and tried to address existing needs, but up to now no global solution exists.

Existing electronic payment solutions are not secure enough, too difficult and slow to use, or available only for a limited variety of goods or a small selected clientele. The SEMOPS payment solution is a secure electronic payment service - payment is carried out with a mobile device or over the Internet - with an innovative technology and business concept that aims to fully address current obstacles. The SEMOPS Consortium is a group of 15 companies that will design, develop, pilot and prepare for commercial introduction of the SEMOPS electronic payment service.

The group is a good mix of large multinational companies and small SMEs, representing the banking sector, the telecommunication industry, the it sector, the consulting business, the research area and retail commerce. They are: Bull Kft., Deloitte & Touche Kft., Fraunhofer FOKUS, Fornax Rt., Intrasoft International S.A., Kereskedelmi es Hitelbank, Libri Kft., Oberthur CS., Motorola Kft. (project coordinator), Piraeus Bank / Winbank, Profitrade Kft., Raiffeisen Bank, SafePay Systems Kft, Vodafone-Panafon (GR) and Westel Mobil Rt.

SEMOPS was designed and developed with the primary concept to tailor it to the specifics of the electronic commercial channels, Internet and mobile. This is a major advantage compared to other existing payment services that have been serving us for decades in the traditional commercial environments but are showing great weaknesses, when they are used in a function for which they were not designed.

The key features of the SEMOPS payment service are: Security - Trust Speed User friendliness Cooperative approach Universality Openness Independence Advanced technology Good economics SEMOPS is a complex, universal, user-friendly service, allowing real time payments for practically any kind of transactions on mobile devices and the Internet. The possible transactions include POS payments, in band purchases - Internet and WAP-, P2P transfers, purchases made at vending machines and bill payments. The payments are not limited by value, as both micro and macro transactions can be performed.

The service facilitates not only retail but also B2B transactions. Refund handling is also a standard function, and the fact that refunds can be performed even real time makes the SEMOPS service unique. For the customers and merchants their own banks or mobile operators provide the payment service. As no intermediaries are involved in this relationship, the entire payment transaction is based on trust between known partners.

The service structure is completely open, any bank or mobile operator can join, and all their customers and merchants can transact with each other without knowing or authenticating each other in advance or during the payment process. In order to allow maximum flexibility for the users and quick penetration for the service, the concept of openness and independence has the highest priority.

The service is designed to be used by any type of mobile phone, in any network environment, using practically any communication channel and a number of different transport layers. The solution provides substantial benefits to the end users, customers and merchants, in terms of cost, security, privacy and user friendliness. Participating banks and mobile operators realize advantages as well, through new revenue streams, improved customer relations, and the introduction of new value added services.

The service concept follows a whole new approach in electronic commerce, as it is built on the credit push concept. Having selected the required goods the customer receives certain transaction related data from the merchant. Customers do not provide any sensitive data to the merchant during the payment process; therefore they can practically remain anonymous. Having received the necessary transaction details, the customer prepares and signs a payment request and forwards it to his or her own payment processor.

If the necessary funds are available, the merchant receives a payment notification, which is a kind of guarantee from its own payment processor. To ensure the security, simplicity and speed that are the basic minimum criteria of an electronic payment service, the SEMOPS payment process is assisted by software applications at all partners involved. Customers and merchants receive the software modules from their own banks and mobile operators. The SEMOPS payment service establishes the cooperation of banks and Mobile Network Operators (MNO).

The service is based on bank accounts or accounts maintained by mobile operators. As a result the potential consumer base of the service is far greater than that of the existing solutions, as whole new market segments and market sectors can be accessed with the new payment method. The service is provided to the end users, customers and merchants, by their local payment processors. The payment processors are the banks in case of macro payments and could be the MNOs in case of micro transactions. The business model is open.

Any bank or MNO may participate in the service offering, allowing their clients to transact with the clients of any other service providers. The solution realizes the concept, supported by the transaction process, that customers should have access to all merchants irrespective of the fact that they belong to the same operator and bank or not. Conversely, all merchants can have access to the whole market and not only to those customers who happen to be served by the same bank or MNO.

Customers and merchants transacting with each other do not have to know each other in advance, and do not have to authenticate each other. The service establishes this general open interaction without any central registration. The service relies on a very strong network effect, because of the universality of the payment solution. Users, originally using the service for their preferred transaction types, soon will try it for other purchases as well and eventually the use of the solution will be a familiar, natural choice in any payment situation.

Payment processors have complete freedom in structuring their service offering. They may freely decide about important business issues like what transaction types they offer, when and how they are timing the introduction of new transaction types, what fee structure they are using when charging the users, what fee levels they are using, how they are differentiating between the transaction types and how they are differentiating between the users.

Because of the direct, close relationship between the payment processors and their clients the payment processors under their own brand, brand the service. The business model of the SEMOPS service is a pyramid like structure, where any participant is only related to its own partner, and pays a fee for the service received. Customers are clients of their own payment processors. They receive the service from their own bank or MNO.

One customer may have a number of active payment processors, although only one of them is involved in any specific transaction. Merchants are clients of their own banks or MNOs as well. They are charged for this service by their own payment processor. The service structure, the fee structure and fee level is defined bilaterally by the partners. From an economic point-of-view, the service offers unparalleled advantages for its users.

Based on the complexity of the service and the market strength of the two key partners (group of banks, group of MNOs) the service will follow a revenue maximization strategy. The revenue maximization policy is based on the following factors: combination of customer base of the banks and mobile operators; combination of transaction potential of different transaction channels i.e. mobile, internet, traditional (POS); combination of transaction potential of different transaction types i.e. C2B, B2B, P2P; combination of transaction potential of different values i.e.

micro, mini and macro; and combination of transaction potential of large geographical coverage i.e. domestic and cross border. On the cost side the business model utilizes all the potential that the complexity of the service provides in terms of scale and efficiency. The new service has a relatively low cost structure due to several factors. The operation is fully automated. The service leverages existing infrastructure, and also communication is optimized always using the most cost efficient channels.

Other cost items are also well controlled by optimizing the settlement process, and keeping the security expenses low, due to the secure process flow, and strong encryption applied. There are numerous commercial situations, where direct payments are necessary, and the introduction of a real time, open mobile-to-mobile service provides great added value to merchants and customers. The customer owes money to a friend or wishes to transfer money to someone. In this situation there are three options available.

If the two parties are in the proximity of each other the payee's device sends the transaction data over to the payer's handset using either IrDA, BT, or RFID communication. If the two parties are not in the position of using a direct link, the payee can send the necessary information over the air (SMS, IM) to the other party. In certain cases the payer initiates a transfer while the payee may not even be aware of the fact that he or she is going to receive money.

In this case the payer can manually input all necessary information into the handset. Depending on the transaction value the payer in all three cases has the option to select either its bank or MNO for processing the payment. The payee will receive the payment notice on its mobile handset in real time. A merchant may not have a regular POS terminal either because of the cost implications, or the type of services offered, or because of the mobility of the operation. (e.g. taxi driver).

With the mobile merchant module in the handset of the seller, the merchant is capable of providing the necessary payment information to the customer. The customer initiates the payment through its bank or mobile operator and the merchant receives the payment notice onto the mobile device. As this payment notice serves as a payment guarantee of the merchant's bank, the products and services can be provided risk free to the customer real time.

Optionally it is also possible to digitally sign the original payment information, in which case the message from the merchant to the customer serves as a legally acceptable invoice. SEMOPS facilitates not only retail but also business-to-business transactions. There are different payment types that can be selected by the users like prompt payment, value date, or recurring payments. Cross border payments are facilitated with the conversion feature offered. The real time refund handling, which is also a standard function, makes the SEMOPS service unique.

Payments are not limited by values, as both micro and macro transactions can be performed. With SEMOPS, remote parking payment is possible, avoiding the hassle with meters and coins. The customer sends the payment through its payment processor to the parking company, who starts running a temporary parking permit. When the controllers find a car without a valid ticket they first communicate with the central database and verify whether the car has a valid mobile parking permit or does not. Total response time is about 25-30 seconds.

Customers can buy their tickets to events by using WAP or web services and paying with SEMOPS. When the merchant receives the payment confirmation, the ticket is sent electronically in the form of an SMS message to the mobile handset. When the ticket is presented for control, the controller reads the screen with a special device and checks the validity of the ticket. Customers can also use this service to pay at a vending machine.

The vending machine is capable of transferring the transaction details to the customer like a POS terminal, and upon receiving the payment confirmation, it provides the selected product. This payment solution can also be tied into the remote management of the vending machines. Customers can also select the amount they wish to withdraw from an ATM, receive the transaction details, approve the transaction and when the ATM receives the authorization to issue the money, customers can take the cash. The ATM behaves like a vending machine selling cash.

SEMOPS facilitates improved store logistics and could allow customers to check themselves out at unmanned POS terminals. The terminals read the price tags, transmit the payment information to the customer's handset, and receive the payment confirmation from the bank. This self-service solution allows customers to avoid standing in lines during peak hours, and also increases the capacity of the stores. A good combination of mobile and Internet transactions can be realized in case of electronic bill presentment and payment.

The total amount of an invoice is sent to the mobile device, while detailed figures can be accessed over the Internet. Should customers be interested only in the bottom line, they can perform the SEMOPS payment from the handset directly, or alternatively, if the details need to be known as well, the same invoice is accessible and payable from the Internet.

To ensure the security, simplicity and speed that are the basic minimum criteria of an electronic payment service the SEMOPS payment process is assisted by software applications at all partners involved. Customers and merchants receive the modules from their.