CSE-302 Mobile Payment

1CSE-302MobilePaymentDr.R.B.Patel2WhatisDrivingMobilePayment?•Maximizationofrevenuefromwirelessdataservices•Thehandsetaspersonaltrusteddevice•Encouragingadoptionofnextgenerationmobiledevices3Whatispayment?•Apaymentisthetransferofwealthfromoneparty(suchasapersonorcompany)toanother.•Apaymentisusuallymadeinexchangefortheprovisionofgoods,services,orboth,ortofulfillalegalobligation.•Thesimplestandoldestformofpaymentisbarter,theexchangeofonegoodorserviceforanother.4Continue…•Inmodernageapaymentsystemisasetofproceduresandassociatedcomputernetworksusedtosettlefinancialtransactionsinbondmarkets,currencymarkets,andfutures,derivativesandoptionsmarkets,andtotransferfundsbetweenfinancialinstitutions.•Duetothebackingofmodernfiatcurrencieswithgovernmentbonds,paymentsystemsareacorepartofmoderncurrencysystems5Continue…•Barterisatypeoftradeinwhichgoodsorservicesaredirectlyexchangedforothergoodsand/orservices,withouttheuseofmoney.•Itcanbebilateralormultilateral,andusuallyexistsparalleltomonetarysystemsinmostdevelopedcountries,thoughtoaverylimitedextent.•Barterusuallyreplacesmoneyasthemethodofexchangeintimesofmonetarycrisis,whenthecurrencyisunstableanddevaluedbyhyperinflation.6Continue…•Inthemodernworld,commonmeansofpaymentbyanindividualincludesmoney,check,debit,credit,orbanktransfer,andintradesuchpaymentsarefrequentlyprecededbyaninvoiceorresultinareceipt.•However,therearenoarbitrarylimitsontheformapaymentcantakeandthusincomplextransactionsbetweenbusinesses,paymentsmaytaketheformofstockorothermorecomplicatedarrangements.•Inlaw,thepayeristhepartymakingapaymentwhilethepayeeisthepartyreceivingthepayment.7Whatismicropayment?•Micropaymentsaremeansfortransferringverysmallamountsofmoney,insituationswherecollectingsuchsmallamountsofmoneywiththeusualpaymentsystemsisimpractical,orveryexpensive,intermsoftheamountofmoneybeingcollected.•Micropaymentoriginallymeant1/1000thofaUSdollar,meaningapaymentsystemthatcouldefficientlyhandlepaymentsatleastassmallasatenthofacent,orfewpaisatorupees.•butnowisoftendefinedtomeanpaymentstoosmalltobeaffordablyprocessedbycreditcardorotherelectronictransactionprocessingmechanism.•TheuseofmicropaymentsmaybecalledMicro-commerce.8Continue…•Amicropaymentisanonlinetransactionofasmalldenominationse.g.$2,£3.50,or€4,andcanbeusedfordigitalcontentpurchasesuchasmusic,newsorconsumerreports.•AmicropaymentcanalsobeusedtochargefordigitalservicessuchasP2Papplicationsandaccesstowebsitememberareas.9Continue…•Amicropaymentsystemisanonlinepaymentsystemswhichsupportschargingrelativelysmallamountsforonlinecontentorservices.•Herethespeedandcostofprocessingpaymentsarecriticalfactorsinassessingaschemesusability.•Fastuserresponseisessentialiftheuseristobeencouragedtomakealargenumberofpurchases.•Processingandstoragerequirementsplacedonmicropaymentprovidersandvendorsmustbeeconomicforlowvaluetransactions.10Whatisamacropaymentsystem?•Amacropaymentisanonlinetransactionofhigherdenominationse.g.€10.•Macropaymentsplayakeyroleinthebillingoftangiblegoodsbutarealsocommonlyusedfordigitalcontentandservicese.g.subscriptions,software,gamesandmore.11Continue…•Amacropaymentsystemisanonlinepaymentsystemspecializedontheprocessingofhigheramountsincomparisntomicropayment.•Apartfromspeedandcostsahighdegreeofprotectionisessentialsuchasscoringandcreditworthinesschecks,riskmanagementandfraudprotection.12EvolutionofOnlinePayments13Mobilepayments•Mobilepaymentscanbesplitintothreecategories-mobilecontent,out-of-bandandproximity.•Becauseoftheirexpertiseintheareaofbilling,networkoperatorsaresuitedtodeliver-paymentservicesformobilecontent.•Thistypeofpaymentissometimesreferredtoasin-bandwherethecontentandthepaymentchannelarethesame.•AnexampleisachargeableWAPserviceoverGPRS.Userswilleitherbeofferedsubscriptionorperusagepaymentmodels.•Forper-usageusers,thenatureofthetechnologyandservicesmeansthattransactionswillbesmall,sooperatorsneedtoimplementlow-frictionmicropayment.•Applicationsthatcouldbecoveredbyin-bandtransactionsincludedvideostreamingofsportshighlightsorvideomessaging.14Continue…•Outofbandreferstothefactthatthepaymentchannelisseparatetothatusedforashoppingphase.•Forexample,acreditcardholdermayusetheirmobiledevicetoauthenticateandpayforaservicetheyconsumeonthefixedlineInternetorinteractiveTV.•Inordertomakethewirelessdevicesuitableforauthenticatingpayments,financialinstitutionsareespeciallyinterestedinwirelessPKI,sharedsecret(orsymmetricalkey)schemes,orbestofallmergingwiththeirchipcardprogramsviadualslotordualchipdevices.•PublicKeyInfrastructure(PKI)enablestheimplementationoflegallybindingvirtualtransactionsusingdigitalsignaturescriticaltostemthelossessufferedbyfinancialinstitutionsthroughpaymentrepudiationandotherfraud.15Continue…•Apromisingpaymentapplicationformobilecommerceisproximitytransactionsusingthedevicetopayatapointofsale,vendingmachine,ticketmachine,tolls,parking,etc.•Byleveragingparalleltechnologies,suchasBluetoothand802.11,mobiledevicescanbetransformedintosophisticatedpaymentdevicesthatcanprocessbothmicroandmacropayments.•PilotsarealreadyunderwayinJa