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Another way to pay

With so many options available, what's the compelling reason to pay via one's mobile phone?


July 1, 2008  


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By the time you read this, MasterCard Canada and Bell Mobility should be in the midst of a four-month test that could eventually give Canadians the ability to pay for purchases with their mobile phone. The question I have to ask is do we really need it?

The mobile industry and those who watch it have been excited about this type of device-enabled commerce since Industry Canada awarded digital PCS (Personal Communications Services) licences in the mid-1990s.

Coincidentally, that is about the same time that the debit card was gaining real traction as a payment option in this country.

The debit card (or bank card) gave Canadians an important choice for secure payments: We could use a credit card to buy something with money we did not yet have OR use a debit card to buy something with money that we already did.

Either option offers advantages over using cash or cheques such as authentication, security, creating a paper trail of the purchase and so on.

More recently, contactless payment systems have rolled into the market. MasterCards PayPass is one of these. So are the various systems found at gas stations: Esso’s Speedpass and Shell’s easyPAY.

These systems use near-field communications and RFIDenabled cards or key fobs. In a nutshell, it is “tap-and-go” payment: Touch your key fob or wallet to a sensor and you are done. Paying this way speeds up the process in most instances by eliminating the need to find the card and then type in a code or sign a receipt.

So what is new?

Now, the payment folks and the mobile squad want to move contactless payment to our mobiles. Beyond the geek factor, I am at a loss to understand the advantages of this.

I suppose someone who does not need to carry keys or cards will welcome the ability to add m-payments to their phone, but how many of us can get through daily life without keys and cards?

Yes, there is some added security in that the PayPass application can be password protected so that a lost or stolen phone cannot be used to purchase goods.

However, debit cards already have pass codes, so they already offer a comparable level of security. What is more, password protection would eliminate the convenience of tap-and-go commerce. So what is new? More to explore.

And that is really too bad, because Canadians actually could enjoy many benefits from a payment system that uses the phone to authenticate transactions in which the card is NOT present. These types of transactions happen all the time on the Internet.

Canadians love shopping on the Internet. Today, I can buy goods by typing in my card number, expiry and in some cases a three or four digit security code that is found on the card itself. That is a process any thief with card in hand can follow, too. But what if MasterCard has linked my wireless number to my account? MasterCard could automatically generate a message sent to my mobile, asking for a PIN to authenticate the transaction. Someone stealing my card and my phone would still not be able to use the card to buy stuff online.

And if someone attempted to use information from a legitimate transaction to commit fraud (a process known as skimming) the request for a PIN would alert me to the fact that something was not right.

Perhaps this is the direction in which card issuers and wireless networks would like to evolve the current payment system, and the current test of contactless payments using mobile phones is a first step.

If so, then it is a great idea but there is more to explore. Keep going, and I will be the first in line to sign up for the authentication service when it hits the market.

But if what were about to see is simply another way to pay — a substitution of the physical device used — then it is time to return to the idea lab. Canadians already enjoy the convenience of debit and credit cards, contactless key fobs, cash and cheques.

Unlike a phone, these will not die if we forget to plug them in and they will never ring in the middle of a transaction.

In the meantime, the best payment-related use for our mobile phones may be to store the emergency numbers of our various card issuers in case our wallet or purse is lost or stolen.

Trevor Marshall is a Toronto-based reporter, writer and observer of the Canadian wireless industry. He can be reached (on his mobile) at 416-878-7730 or trevor@words-tm.com.