| Consumers around the world are abandoning fixed line | | | | market as "any payment $10 or below, but we can |
| phones in droves and replacing them with mobile | | | | also handle mid-sized payments from $10 to $25 and |
| phones. According to a study by research firm Mori, | | | | even larger payments up to hundreds of dollars." To |
| fixed-to-mobile substitution is occur¬ring across | | | | pur¬chase online content or services, BitPass |
| the four major markets surveyed - the United | | | | "Spenders" first purchase a virtual prepaid debit card |
| Kingdom, United States, Germany and South Korea - | | | | using traditional payment channels such as Visa, |
| with upwards of 45 million consumers estimated to | | | | MasterCard, Discover, American Express or PayPal. |
| now make all their voice calls from their mobile phone | | | | They can then use these credits with BitPass |
| in these markets alone. This new generation of | | | | "Earners" to anonymously and securely purchase |
| landline-less consumers has the potential to drive | | | | music, photos, games, articles and other items. Graves |
| m-commerce to new heights in the years ahead. This | | | | asserts that the company's "good funds" model |
| wireless explosion also has implications for mobile | | | | means that no merchant has ever been a victim of |
| merchants and their ability to process electronic | | | | fraud. |
| transactions virtually anywhere at any time. | | | | Similar to eBay, BitPass makes its money from the |
| One person who keeps the pulse of m-Commerce | | | | seller, not the buyer. The com¬pany normally |
| and mobile payments in partic¬ular is Simon Pugh, | | | | makes a 15 percent commission on items less than $5 |
| president of the Mobile Payment Forum. The Mobile | | | | and pay Earners via automated clearing house (ACH) |
| Payment Forum describes itself as a global, | | | | or Pay Pal when their account accu¬mulates $20. |
| cross-industry alliance of leading organizations from the | | | | "We handle three critical items for our users: |
| wireless and financial industries dedicated to realizing | | | | authentication, access control and payment |
| the full potential for mobile payments. Pugh explains | | | | processing," says Graves. "Our goal is to help sellers |
| that "there are two broad categories: remote | | | | of all sizes monetize digital content." |
| trans¬actions that are usually | | | | Content and service providers can enable their |
| micropayment-based and local transactions that use | | | | offerings in as little as 30 minutes by simply uploading a |
| RF (radio frequency) or NFC (near field | | | | single file to their site. Pixel]ump is one merchant that |
| communications), which can be used for any size | | | | uses BitPass to sell ringtones, games and graphics, and |
| transaction but are currently associated with | | | | delivers them via short message service (SMS). |
| quick-service retail." | | | | Meanwhile Peppercoin recently announced its |
| Let It Ring | | | | Peppercoin 3.0 Small Transaction Suite, which adds |
| In terms of remote transactions, Pugh sees ringtones, | | | | subscription and prepaid payment capability to the |
| MP3 files, movie theater tickets and other time-driven | | | | company's pay-as-you-go and post-paid processing |
| event ticketing as today's big movers. "It is a much | | | | service. Peppercoin is partnering with Sun Trust |
| better shopping experience to buy larger items over | | | | Merchant Services to deliver the small payment |
| the Internet from your home or office PC," he says. | | | | processing system to merchants. "Peppercoin's |
| As phones and personal digital assistants (PDA) sport | | | | solution is the only one that supports our merchants' |
| larger screens, more memory, keypads, Internet | | | | needs for digital, mobile and physical point-of-sale |
| protocol (IP) connectivity and faster download | | | | (POS) transactions," says Barbara Roeber, Sun Trust's |
| capabilities, it will make it easier to transact remotely. | | | | general manager and senior vice president. |
| Yet Pugh concedes that it will take quite awhile for | | | | Mark Friedman, president of Peppercoin, is also excited |
| transactions to migrate from the micro level (under $5) | | | | about the possibilities: "Each year, more than 354 billion |
| to the macro level. | | | | cash transactions occur in the U.S. for less than $5 at |
| Bellevue, WA-based Infospace is a leading producer | | | | the physical point of sale, representing $1.32 trillion in |
| and publisher of personalized media, games and | | | | aggregate rev¬enue. We hope to tap into this |
| directory services for the mobile market. It offers the | | | | market and move these consumers away from cash |
| largest licensed catalog of monophonic (single tone) | | | | payments." |
| and polyphonic (16 to 24 notes using the Musical | | | | 'Small' Markets |
| Instruments Digital Interface [MIDI] format) ringtones in | | | | Leading markets include vending ($18 billion), parking |
| North America. According to Consect, a consulting firm | | | | ($10 billion), coin-op ($6 billion) and quick service |
| headquartered in New York, ringtones generated | | | | restaurants ($110 billion). Peppercoin already has a |
| about $4 bil¬lion in sales around the world in 2004. | | | | foothold in the parking meter market with its signing of |
| America accounted for only $300 mil¬lion of that, | | | | Reino Parking Systems, a global leader in on-street |
| although Consect predicts the figure will double this | | | | parking solutions. The new high-tech meters are |
| year. Shane Dewing, vice president at Infospace, says | | | | equipped with card swipes, but users with cards on file |
| "ringtones are all about personal¬ization. Right | | | | also can pay by dialing a toll-free number and entering |
| now most are simple polyphonic snippets, but we see | | | | a meter number and payment amount. Additionally, |
| the future as entire MP3 song downloads and even | | | | users will receive SMS text messages when their |
| video ringtones." | | | | parking time is close to expiring so that they can |
| Infospace handles the complicated and onerous task | | | | con¬veniently and remotely add more time to the |
| of licensing music from record companies, publishers | | | | meter. Users of the system can also purchase virtual |
| and artists, as well as formatting the ring¬tones | | | | parking passes with their debit or credit cards, thereby |
| for the myriad of handsets that are out on the market. | | | | trans¬forming these cards into virtual pre-paid |
| According to Dewing, "40 percent to 50 percent of our | | | | cards-the next time they swipe the same debit or |
| music sales are from independent labels, so it is much | | | | credit card, it will deduct the charge from their balance |
| easier for us to han¬dle these thousands of | | | | that is stored on the gateway. |
| licensing agree¬ments than it is for our clients." | | | | Not wanting to be left out of the small payments |
| Most of the major telecom players handle their | | | | market, Star Networks is reducing its fees for a wide |
| downloads on a "post paid" basis through their monthly | | | | range of merchants where low-ticket cash |
| billing statement, often relying on third parties such as | | | | transac¬tions predominate: commuter-transit |
| Qpass and Qualcomm to provide the technology | | | | agencies, parking lots, news dealers, |
| needed to handle authentication and entitlement. Sprint | | | | laun¬dromats, car washes and cinemas. The |
| is the exception in that they have developed their billing | | | | nation's largest electronic funds transfer network has |
| and delivery system in-house and have successfully | | | | even gone so far as to create a new merchant |
| offered a sub¬scription-based service, as | | | | category, called small ticket, with fee pricing intended to |
| opposed to the other carriers who have focused on | | | | encourage installation of PIN pads and |
| single downloads. Consumers also can download | | | | con¬version of typical cash payments to PIN |
| ringtones, wallpapers, screensavers, games and | | | | debit. |
| quizzes from popular online sellers such as Zingy and | | | | While many merchants shun payment card |
| Jamster. | | | | transactions of $10 or less, small ticket sales increased |
| While the post-paid model is a stan¬dard | | | | nearly 50 percent from $23.7 billion between 2003 and |
| payment method right now, micropayment firms such | | | | 2004, according to CardData Diamond. Fast food |
| as BitPass and Peppercoin are hoping their | | | | sales with average ticket sales running $11 per |
| solu¬tions can find traction in both the | | | | transaction hit $22.5 billion in 2004, while credit/debit |
| m-commerce and e-commerce mar¬kets. | | | | card sales of transactions of $5 or less grew from |
| Matthew Graves, COO at BitPass, describes its target | | | | $10.8 billion to $13.5 billion last year. |