Billing and Payment Services

Mobile payment is new and rapidly-adopting alternative payment method; used increasingly worldwide. Instead of paying with cash, cheque or credit cards, a consumer can use a cell phone to pay for wide range of services and digital or goods such as: Music, videos, ringtones, online game subscription or items, wallpapers and other digital goods. Transportation fare (bus, plane, subway or train), parking meters and other services, like books, magazines, tickets and other goods.

VISA and Mastercard are old school, so is cash!

Youtube video on paying with your cell phone

Youtube video on mobile train ticketing

$600 billion globally by 2013

Mobile payment has been well adopted in many parts of Europe and Asia. Combined market for all types of mobile payments is expected to reach more than $600 billion globally by 2013, while mobile payment market for goods and services, excluding contactless NFC transactions and money transfers, is expected to exceed $300 billion globally by 2013.

Micropayment
Some mobile payment solutions are also used in developing countries for micropayments. Micropayments are means for transferring very small amounts of money, in situations where collecting such small amounts of money with the usual payment systems is impractical, or very expensive, in terms of the amount of money being collected. "Micropayment" originally meant 1/1000th of a US dollar, meaning a payment system that could efficiently handle payments at least as small as a mill, but now is often defined to mean payments too small to be affordably processed by credit card or other electronic transaction processing mechanism. The use of micropayments may be called Microcommerce. More info at: http://en.wikipedia.org/wiki/Micropayment

Premium SMS has been in use around the world for many years. It has grown to become a multi-billion industry! Premium SMS is the perfect solution for many types of micro-payment services.
- Bill for SMS messages.
- Bill for WAP content.
- Bill for MMS content or messages.
- Bill customers effectively for low-value transactions.
- Perfect for subscription as well as one-off transactions.
- An alternative to Credit Cards.
Credit cards have proven to be ineffective in attracting micro-payments from end-users. Premium rate voice numbers have a horrible reputation and are plagued with huge charge backs. Why bother dealing with these problems, when Premium SMS has no such issues and is perfect for billing the youth market, which typically does not have access to credit cards.

Tech Info
There are four primary models for mobile payments:
1. Premium SMS based transactional payments
2. Direct Mobile Billing
3. Mobile web payments (WAP)
4. Contactless NFC (Near Field Communication)

1. Premium SMS
Reverse SMS billing or premium SMS service means that the user of the recipient phone rather than the message sender is charged for the cost of the SMS message received. It is also called MT (Mobile Terminated) Billing. Reverse-billed SMS messages should only sent if specifically requested by the phone user, however many unscrupulous operators will send reverse charged messages without prior consent of the recipient, which often go un-noticed by users on Pay As You Go plans without itemised billing. A daily weather alert is an example of a service where regular reverse-billed messages are received.

2. Direct Mobile Billing
This is where the consumer uses mobile billing option during checkout at an ecommerce site such as an online gaming site to make a payment. After two-factor authentication involving PIN and One-Time-Password, the consumer's mobile account is charged for the purchase. It is true alternative payment method that does not require use of credit/debit cards or pre-registration at online payment solution such as PayPal, thus bypassing banks and credit card companies altogether. This type of mobile payment method, which is extremely prevalent and popular in Asia, provides the following benefits:
- Security - Two-factor authentication and risk management engine prevents fraud.
- Convenience - No pre-registration and no new mobile software is required.
- Easy - It's just another option during a checkout process.
- Fast - Most transactions are completed in less than 10 seconds.
- Proven - 70% of all digital content purchased online in some parts of Asia uses Direct Mobile Billing method

3. Mobile web payments (WAP)

This is where the consumer uses web pages displayed or additional application s/he downloaded and installed on his/her mobile phone to make a payment. It uses WAP (Wireless Application Protocol) as underlying technology, thus inherits all the advantages and disadvantages of WAP. However, using a familiar web payment model gives a number of a few proven benefits:
- Follow-on sales where the mobile web payment can lead back to a store or to other goods the consumer may like. These pages have a URL and can be bookmarked making it easy to re-visit or share with friends.
- High customer satisfaction from quick and predictable payments
- Ease of use from a familiar set of online payment pages

However, unless mobile account is directly charged through mobile network operator, use of credit/debit card or pre-registration at online payment solution such as PayPal is still required just as in desktop environment. Mobile web payment methods are now being mandated by a number of mobile network operators. A number of different actual payment mechanisms can be used behind a consistent set of web pages.

4. Contactless NFC (Near Field Communication)
NFC is used mostly in paying for purchases made in physical stores or transportation services. A consumer uses a special mobile phone equipped with a smartcard waves his/her phone near a reader module. Most transactions do not require authentication, but some require authentication using PIN, before transaction is completed. The payment could be deducted from pre-paid account or charged to mobile or bank account directly. In some countries, providers are required by law or regulation to provide a means of opting out of a service once it has been commenced. Most typically, this is achieved by sending a stop message (most typically, simply STOP) to the same number as the service itself.
More info: http://en.wikipedia.org/wiki/Mobile_payment#Direct_Mobile_Billing