Mobile payment trends & terminology

A revolution lies around the corner using your mobile phone as an electronic wallet. NFC as proximity communication technology will play a key role in this. Let's first clarify some terminology:

• Electronic wallet: The future is one of smartphones storing prepaid amounts, bankcard identities, vouchers, fidelity cards, tickets all in an encrypted module in the smartphone with a cloud information backup. Phones who will support this feature do require the wireless technology “NFC”. (more on this later)
   
• Operator billing: Mobile phone companies handle the “SMS” payments (e.g. pay a bus ticket). Of course this is easy money for them: they get a transaction fee per SMS, so the seller will not get the full payment.
   
• Vendors such as Apple & Google try to get as much revenue as possible by forcing to pay for app’s in their apps-store. E.g. a newsmagazine wanting to offer an e-subscription to their magazine on e.g. a tablet using an app might be confronted with up to 30% of their subscription revenue going to Apple. Some will therefore try to keep payment outside the app store, but build it into the app. That’s what’s called in-app payments.
   
• Micro payments are a new given the last 5 years: Technology has made it possible to make payments for very small amounts (e.g. a song @ 99 Cents). PayPal is the market leader in this domain.
   
• To get your electronic wallet to work, it should be able to communicate with equipment, such as a checkout, a vending machines,... NFC (near field communication) is a wireless technology intended for short distances. You swipe you phone over the reader to initiate a transaction (such as, validate a ticket, make a micro payment,...). New smartphones and some tablets have nowadays an NFC chip onboard, at least if they are Android (Google) based or Windows (Microsoft) based.
   
• Apple was in 2013 using a competing technology, called AirDrop. This one uses ad-hoc Wifi and Bluetooth as wireless technology. They now agreed to start using NFC as all the rest and launched Apple Pay Q4 2014.

Google wallet as example to get a coke out of a vending maching. This would use the proximity of NFC as technology to detect the smartphone at close distance of the vending machine. Local player Belgacom tried to have a Belgian platform rolling out it’s “PingPing” solution as a standard for Belgian mobile phone operators & banks. This agreement blew up though.

ping.ping

PingPing is a mobile payment system that allows you to purchase products and services using your mobile phone.
The PingPing platform is open to all mobile phone users in Belgium and also offers different services such as loyalty programs, e-tickets and discount vouchers.Question is though about market acceptance, especially as agreements between mobile phone companies and banks did not result in the ambitious plan for a Belgian "e-wallet" solution.

Have a look at the intro video on their website:

SixDots

Belgian Mobile Wallet, SA/NV, a company founded by Belgacom + BNP Paribas. They are in the race to be ready before a volume rollout by Apple and/or Google happens. (Apple is already quite active with passbook on the Belgian market)

This startup was planning to release its product early 2014. It's still not avialable...

Functionality:

• App to store bank cards protected by a 6 digit pin on phone. No need for a cardreader. All your cards and personal data are one tap away, protected by a six digit PIN on your phone.
• Shopping is not just about paying. Integrates coupons, tickets and loyalty solutions for you to use when you need them
• Everyone with a smartphone, with internet access, and a Belgian bank card will be able to use Sixdots.

www.sixdots.be

Some noteworthy local and global mobile payment solutions

• M-banxafe:  Service possible for SIM-cards issued as of 2003.  Enables bank transactions from a linked account on mobile phones, such as verifying your account balance, filling up your prepaid card, etc...
   
• SMS payment services for micropayments have become very popular the last years. Applications such as SMS car parking, SMS bike renting, SMS bus service ticket are widespread and accepted by a large part of the population.  The main disadvantage of this type of service is that the mobile phone companies get rich from this payment method: they use so called operator based billing, and get a transaction fee.
   
• Those mobile phone companies offering operator based billing would love to extend this forever, but new solutions such as Google Wallet and Apple Passbook are waiting around the corner...
   
• PingPing: A solution with Proximus as main investment partner. The intent in 2011 was to set up a consortium with the main belgian banks and mobile phone companies to come up with a Belgian “electronic wallet”. This project is in difficulties though. So this might leave the road wide open for Google and Apple.
   
• Square: Square is an electronic payment service, provided by Square Inc. Square allows users in the United States and Canada to accept credit cards through their mobile phones, either by swiping the card on the Square device or by manually entering the details on the phone. In August 2012 Starbucks announced it would start using Square to process transactions with customers who pay via debit or credit card.
   
• Bancontact/Mister Cash App: Uses scanning QR code to trigger payment. Intended for mutual payments between users, online payments in webshop, retail payments