Decoupling the small print

[Dave Birch] I went to Germany for a couple of days. Amongst other things, I saw a presentation from of Vodafone Germany, talking about the new retail payment scheme that they are launching in partnership with O2…

The new payment system combines the direct debiting system (German: Lastschriftverfahren) with SMS payment confirmation through mobile phones. That means:

1. you order a product on a mobile portal or web shop
2. then you type in your mobile phone number and password
3. following you will receive a text message (SMS), which you have to confirm in order to debit the amount from your bank account via direct debiting system.

[From PavingWays – web applications on (mobile) devices : O2 and Vodafone starting new payment system]

The system is open to all mobile phone users and anyone can register but of course the registration is much simplified for Vodaone and O2 subscribers who already have bank details filed with their operators ready for direct debiting (because there existing phone subscription works that way). I spoke to Vodafone about it and they said that they anticipated two revenue streams: additional text messaging for one, a merchant service charge for the other. I got the impression that the MSC would be pitched around the same as for credit card acceptance. As for the future, they said that

We hope to have more NFC-enabled POS-Systems in the future to combine both technologies.

and furthermore

Security is the key requirement in germany

This might well be the way in for mobile phones: yes, they are more functional than cards but they are potentially far more secure as well. Look at Japan again: remote application locking, 24/7 shutdown, location services. These are all security capabilities that come with the mobile environment to deliver a level of security far above the card platform. It’s 9am, do you know where your cards are?

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