SIM Secure Element

One of the most important problems to be solved in the mass deployment of mobile payment solutions is where the "secure element" should be stored. Without going into a lot of detail, this is basically the need to store a digital ID of the payer in such a way that it is very difficult to compromise. Much has been written and speculated on how this should be achieved in mobile payments. (Read this and this for a sample)

It was generally agreed that the Secure Element (SE) could be stored in three possible places:

• In a Memory card that can be inserted in a phone
• In an external device attached to the phone or
• on the SIM card

During the past period, I have heard quite a few organisations (the Euro payment council, the US FSTC an dthe Mobey Forum) verbally confirm that they are starting to realise that the only workable solution is the SIM card. This will start to influence solutions and I believe will help with acceleration of standards and also working solutions.

I believe that the work that we have done at Fundamo have lead toi the most advanced and proven SIM card based solutions currently available.

Money Ventures that are mobile

What made Dumb and Dumber such a funny movie was not because the two friends Harry and Lloyd was so stupid, but that they did not know it. They often acted thinking that they are smart, but it was clear for most that they were not.

I see similar behaviour in the mobile banking industry, but I am often not sure if I should laugh or be sad. I was recently exposed to such a company - one with large shareholders and a very visible profile (and probably a massive budget too).

It is quite unclear what product they offer and how they intend generating the kind of revenue that they would require to sustain their expenses. With many high profile executives and grand plans, it is interesting to hear the articulation of their vision: "poised to set the industry standard for mobile financial services". At the same time ridiculous claims are made like offering financial services solutions that ares unique in offering comprehensive banking, payments, and budgeting tools on the customer’s existing mobile phone. And also that they have created a next generation mobile financial service solution that will accelerate the adoption of mobile financial services worldwide.

In addition, it seems that this organisation is partnering with every willing company, even if they are in competition or when their offerings and business models are diagonally opposed to each other. It would be interesting to have a wager on how the future of this company will pan out.

Paybox and Sybase

I usually comment on technical aspects of the mobile banking industry, but the recent acquisition of paybox by Sybase necessitate some comments. While it seems to be a very good match (Established company with a good brand and distribution network acquiring company with good product and management), the new mCommerce player will be faced with significant integration challenges:

• The culture of an entrepreneurial, Euro-based company will have to merge with an East Coast, listed entity
• The relatively small paybox will have to provide guidance, training and support for a massive organisation, running the risk of diluting scarce resources to a point where it looses it effect
• The new organisation has the ability to create a big demand for product that will be difficult to deliver. Mobile banking is a complex solution to deploy. It takes a long time to train engineers to do this effectively. It would be difficult to scale the delivery capacity quickly enough.

Nevertheless, I wish the ex-paybox staff good luck with their new home.

Attending Mobey Forum in California

I attended the Mobey Forum meeting for the first quarter in California this month. The organisation was very well done and the venue provided by Sybase was very well too. A large percentage of the industry influencers attended and the quality of the presentations were generally of an extremely high standard.

This is my key insights on the meeting:

• The difference in insight, understanding and substance between the US banks and the rest of the world in staggering. The status of mobile banking in the US banking sector is very, very far behind compared to other countries, including emerging countries. What makes this even worse is the fact that I don't think US banks realise this.
• The drive for and the tension between proximity payment initiatives and remote payments was quite obvious. One could see the difference between NFC and remote payment proponents and how they see the world clearly. (I will blog more on this later)
• I found some presentations (especially from smaller companies, or idividuals) to be of the highest quality, while larger companies failed in delivering substance. It was almost the case that the bigger the least substance.
• Standards are being worked on effectively. It was the closest that I think the industry has ever been in actually publishing standards/guidelines that are usuable.

I will blog for the next few weeks on thoughts that was triggered during the meeting.

Credit Card payments for everything

I recently read a great article written by George Thomas (Read it here). It eloquently made the point that credit cards are not designed to be used for all payments. That card payments are unsuitable, expensive and risky for a number of applications. The inherent risks associated with fraud and credit could have major ramifications for the financial system as a whole.

I think it would be correct to add that credit card payments (maybe with a few exceptions) are not at all suitable for mobile payments either. The characteristics of the mobile phone and the multiple applications made possible via mobile payments require a new type of payment. To bend and modify card payments to also support mobile payments is folly.

George made the point that the blanket use of card payments for everything is driven by silo's in large banks - each with their own products and personal objectives. He also mentioned that greed is a major driver for taking the wrong decisions. Could I also offer another reason: "Lack of an ability to think outside the old banking norms."