M-Commerce

Mobile Banking Takes Users Beyond the Ringtone

The idea of using the mobile phone as a virtual wallet isn’t new, it just hasn’t taken off in the United States. But that all could change if domestic wireless operators’ new mobile banking applications take hold.

Cingular Wireless LLC is launching a mobile banking service this quarter, the first major telco to do so. Based on an application from Firethorn Holdings LLC that links financial institutions to carrier networks, Cingular mobile banking will let users extend their online banking experience to the mobile device. Subscribers can view real-time financial account balances, transfer funds between accounts, and look at and pay electronic bills. And it allows deactivation in the event of device loss. No word yet on which banks will be part of the service.

Bango.net’s Anil Malhotra

Elsewhere on the mobile finance terrain, high-end MVNO Helio launched Obopay, a mobile payments solution, in December. The Obopay service is linked to a prepaid MasterCard account, allowing Helio members to manage the account remotely by checking balances, viewing payment histories, adding funds and making payments (for 10 cents each), via a mobile application residing on the device. To enliven the experience, Obopay allows contact list integration and specialized ringtone settings.

Perhaps the most compelling aspect of Obopay is its peer-to-peer ability, allowing users to send funds between Obopay accounts. Users download the Obopay application, set up a PIN, fund the account, and then they can send money to other users’ mobile numbers via a simple interface. That means parents can send their college kids money for books, or Judy can pay John back for buying dinner the night before.

“No longer will consumers be stuck without cash,” says Howard Gefen, executive vice president of marketing and business development at Obopay. “With Obopay on Helio, members can add funds to their Obopay account while mobile, and that’s invaluable for those living the mobile lifestyle.”

There’s been off-portal action in m-finance, too. Wachovia’s 5.9 million customers now have the option of using Windows Mobile 5-enabled smartphone/PDA to check accounts and transfer funds, while Citibank Inc. is testing the “Citi Mobile” program for checking balances, paying bills, transferring funds and searching for a nearby ATM from a mobile handset.

The Phire Person-to-Person Payment System This illustration shows how, using the standard SMS function on any mobile phone, a person-to-person money transfer can be made. Click to Enlarge

Meanwhile, Visa USA has partnered with mFormation Technologies Inc. to develop OTA solutions for mobile payments, so banks and operators will be able to provision mobile devices remotely with payment applications. The relationship includes a strategic investment in mFormation by Visa.

“From our research, 60 to 70 percent of mobile users want a mobile banking feature,” says Moneet Singh, president and COO at Sapphire Mobile Systems. “But consumers need to see it as an extension of what they’re familiar with from online banking, rather than new technology — otherwise, they won’t adopt it.”

Sapphire is launching the Phire mobile finance network this quarter, providing banks and credit card companies with an SMS-based process they can market to carriers. It will allow users to access their bank accounts and make payments from their handsets, just as they would online. Like Obopay, Sapphire also allows peer-to-peer payments. “Unlike using a middleman like PayPal, this is instantaneous, just as if you were using a debit card,” says Singh. “You can send money to someone, who can then pull it out of an ATM or transfer it to their bank account.” Sapphire is in the process of signing up banking partners.

Once users are comfortable banking by phone, will goods purchases be next? To date in the United States, what is purchased on a handset is mobile-consumable content, such as wallpaper and songs, rather than groceries or Christmas gifts. In Canada, however, mobile users can place coffee orders at Starbucks through the handset. “The next step will be allowing payment, so it’s seamless and waiting for you,” says Amyn Samji, director of product line management at Redknee Inc., whose mCommerce Gateway solution enables real-time, peer-to-peer mobile fund transfers. “The first iteration of this idea will be operators partnering with local retailers and shopowners to allow charging of goods to the cell phone bill, rather than linking to a bank account.”

But once m-finance becomes accepted, the idea of cell phone-as-debit card (the m-wallet) finally may take off. “Undoubtedly, as the mobile commerce experience begins to look like the e-commerce experience, that will unlock more true buying of goods with a mobile virtual account,” says Anil Malhotra, co-founder and senior vice president of alliances and marketing at m-commerce platform provider Bango.net Ltd. “Right now, buying soda or movie tickets presents an issue in terms of who governs the user experience. What if you arrive at the store and the soda is sold out, or flat — to whom do you turn for remediation? Where do you get your refund? Once recognizable processes are in place to make the m-wallet function like credit cards, that will be an understandable process that will lower the barrier to use for everyone involved.”

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