Ever increasingly, mobile phones are becoming
much more than just a phone. A vibrant sector of SMS
service providers has sprung up to help businesses
place orders, dispatch staff or goods, keep track of
a multitude of business tasks, and now, even pay for
goods and services using SMS messaging.
Sydney-based service provider Itaba3 is a vendor
of a service that makes it possible for any
merchant, including the self-employed, to accept and
process credit card payments using any mobile phone.
The merchant requires a credit card merchant
facility with their bank and a specialised
processor, known as a "gateway", to channel the
credit card payment securely to the bank.
Sean Collins, director of Itaba3, said that using
SMS to authorise credit card payments became
possible in Australia only in the first quarter of
2003.
"Mobile phones have been around for donkey's
years and SMS also but it's taken this long for the
banks, the telcos and the credit card companies to
put this payment technology together," he said.
Collins said the difference between accepting a
payment using SMS and mobile Eftpos, was that "with
mobile Eftpos, you still have to swipe a transaction
card. You need to physically carry a device around
with you."
Since introducing SMS-based credit card
authorisation via resellers such as Xilo and VeriPay,
Collins said Itaba3 had attracted about 50 active
clients. While that figure is a drop in the ocean
compared with the 500,000 businesses that accept
credit cards overall, it's a niche product many
small businesses may find more appealing than
renting a mobile Eftpos device from their bank.
Collins said education was the reason for the
slow demand. "People are afraid of using mobile
technologies to accept credit card payments. And to
some extent, a lot of tradespeople work with paper
dockets." Collins said Itaba3 was talking with trade
organisations and franchisors to build understanding
of the product.
Tim Batten, a consultant with network services
provider Soprano Design and a former head of
e-commerce payments at National Australia Bank, said
people had already been making mobile payments "for
years - such as every time we use a credit card in a
taxi, or every time we drive on CityLink".
Batten said that for useful commerce to take
place, the payment often needed to be bundled with
the purchase transaction. "For example, the vision
with mobile footy tickets is for you to purchase the
ticket using your mobile and have a barcode image
sent to your phone, which you then scan on the way
into the ground directly from your screen," he says.
Batten said a key to assessing the value of
mobile payments was whether there was a "real and
compelling customer value proposition", which could
be offered to customers profitably and without
disruption to industry norms.
"Jumping the queue at Telstra Dome for tickets,
or at the local cinema on Friday night, paying your
parking meter in a way that makes it easy to claim
from your boss later, paying the guy from Jim's
Mowing by credit card, or authorising payment of
your utility bill on its due date are all
potentially strong value propositions."
Mike Everest, of payments gateway Xilo, said the
use of SMS-based credit card authorisation was
straightforward. He said once the SIM card of a
merchant's mobile phone was registered with the
gateway, a credit card transaction was easily
processed. The merchant, or tradesman, sends via SMS
the customer's credit card number, expiry date and
amount of the payment to the gateway. The gateway's
processing software forwards the transaction for
authorisation and settlement, via a bank. Once
approved or rejected, the gateway sends a SMS notice
to the phone, usually within 20 seconds, to complete
the transaction. The merchant receives the funds
within a few days, depending on their contract with
their bank.
One of Xilo's clients, an early adopter of the
service developed by Itaba3, is Sydney-based
Scooterman, a new service hoping to steal some
traditional taxi business. When customers call
Scooterman, a rider turns up on a collapsible
scooter, folds it up and puts it in the boot, then
drives the customer home in their own car.
Edward Hanrahan, the founder of Scooterman, said
the riders used a company mobile phone to receive
all job notifications, process payments and stay in
touch with base.
