Mobile Academy – Collecting Money – Part 2 Paythru

Posted on December 2, 2012

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Here is the entry in the mobile Academy’s programme

B4 Col­lecting Money How to get the money in! How do all the dif­ferent cus­tomer payment mech­an­isms compare? How do I work with mobile oper­ators? Sub­scrip­tions vs One Offs? Chris Newell, Russell Sheffield 4/10, 8pm (Thurs)
This is the second half of the payment session this time given by Russel Sheffield, Innovation Director at Paythru.

He starts off telling about his early computing and internet and mobile phone experience, leading from early apple computers through to the iphone.
He then moves onto the thrust of his argument which is that “Payments are going contactless”
Though he does not see this as innovation,  as this is just sticking your credit card to your device.
He even shows a picture of such Heath Robinson type solution.
He explains that in these early days of contactless payments there is a lot of fear about the security of the cards, [because early press reports through that it would be possible for a thief to just read your wallet over the air while it is still in your pocket! of course this is nonsense,  but hey when did that stop a journo from writing an article]
And no, foil covered wallets and phone covers are not the way to protect your contactless device.
[Though they do make for an amusing picture]
Despite all this there is a lot of growth in the mobile payments,  even so far as people are buying sofas from M&S and so on. [I think what he is trying to say is that real people will use what they have to buy things, and if it is more convenient then they will use it.  I guess when he states that people buy sofas what he really means is mobile commerce not contactless payments.  Because, here in the UK at least, contactless payments are restricted in value to a few pounds, typically 15 to protect the user, and make the card less valuable.  This is because when you make a payment with contactless means there is no authentication that you are the person using your card,  you just swipe it over the reader, et voila the payment is made a lot like cash.  hence the limit.  Mobile commerce meanwhile is where you are using an application or web site to buy goods,  and then you tend to use an authenticated credit card, and the VISA or mastercards of this world will have run a risk/fraud check on the transaction before authorising it, so a very different thing to contactless.  anyway back to his sesh …]
Ideally this needs frictionless payments,  eg 3D secure has a 30% drop out rate, and. Retailers are dropping it. To prevent this loss, even though the charges are 1% higher.
[What this means is that when you pay on line, you often see a request for your credit card issuer eg Lloyds, to put in you credentials to prove its you.  This 3D system is supposed to mean that even if a thief steals your shops login details and your credit card details, they also have to steal your 3D credentials.  This should only kick in if the fraud/risk engine at VISA or whomever your card provider is, deems the payment to be risky, e.g. your paying in a location you’ve never used before, or from an Internet cafe, type of purchase you’ve not made before etc.
My person experience of 3D is that i can never enter the correct password, even if I have kept a record of it,  and so have to use the reset your password every time,  so yes i do drop out from this if it refuses to agree my password,  very annoying,  get it fixed, that what i say.]
Because retailing typically has very small margins, and the charges are typically cheaper if you match the card to the issuer therefore have several merchant accounts and route the payment accordingly.
[The next parts are really adverts for his companies services,  however there are some useful facts and thoughts]
Case study in South Africa
All debit cards were banned on line in SA.
MTN joined with Paythru because top ups were normally by debit card.
Created the PayD platform that matches a debit card to the user and the bank.
Takealot is an online shop,  where they provide checkout pages, for debit or EFT payments.
You enter your phone number, it then connects over ussd to allow the user to enter their pin on the phone.
[Thus you use your PC and the web browser to choose what you want to buy,  and then when it comes to payment, you enter your mobile phone number, and finish authorising the payment on your mobile phone]
For a chain of restaurants (Jamie’s) they have a till integration with micros to pay for your dinner bill on your phone.  The bill has a pin on the bottom, you enter this into the mobile app, and it loads the bill and allows for you to pay there and then o your phone.
This is very convenient for the customer as you can pay when your ready, and not have to try and gain the waiter’s attention and go through the rigmarole of paying for the bill.
BUT what if you do not have the app,  and you want to pay on your mobile … then they have an SMS route where you can SMS the pin to the system,  and via a few exchanges of messages you can pay for the bill that way too  [it is not clear if you need to have registered your credit card in advance,  I think you do have to,  so not a simple rock up and pay,  but still a step in the right direction.]
[Another note from me:  “Frictionless” we hear this a lot about payments,  it simply means that the process is swift and easy,  added steps (eg enter your pin) add to the friction of the process,  too much friction and the user will simply stop]
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