Opinion: Payforit may be a less attractive proposition than it sounds.

September 7, 2007 at 10:48 am 1 comment

payforitscreenweb.jpgThe UK’s five largest mobile phone operators, Vodafone, O2, T-Mobile, 3 and Orange are all supporting Payforit, a new mobile Internet payment system. Billed as ‘Paypal on your mobile’, its supporters claim that it represents the future of mobile micro payments. Notwithstanding the fact that PayPal Mobile already exists, we’re not sure that Payforit will be able to compete with NFC (Near Field Communications)-based systems in the long term.

The usage scenario for Payforit is very simple. You are visiting a mobile Internet portal via your mobile device. You see something that you want to purchase. You select Payforit as your preferred payment option and confirm the purchase, which is added to your mobile phone bill at the end of the month. The system is designed to replace the use of credit cards and/or premium SMS mechanisms for the purchase of low cost items such as ringtones, and eventually also to pay for things like cinema and travel tickets. The system could also be used to pay for content subscriptions. This is all well and good and will address the kind of scenario described perfectly adequately. The problem is that the mobile Internet is not likely to be the focus of most mobile payments in the long term.

Mobile payments can be split into three broad categories:

  • SMS-based systems ranging from premium SMS purchases, to person to person money transfers for migrant workers, to shortcode based mobile Internet shopping such as that offered by 2shop4
  • Mobile Internet payment mechanisms like Payforit that try to replicate desktop ewallet services
  • NFC-based services that aim to replace cash and plastic in the real world

SMS-based services are already quite widespread and are likely to enjoy some success in the short to medium term simply on the back of the ubiquity of the technology and the relative ease of use. But we’re really not sure about the future of the 2nd category, which includes Payforit. The mobile Internet is far more convincing as an entertainment medium than it is as a mobile conduit for the Internet economy. And despite the fact that the system is only designed to handle small transactions, the possibility of users getting “bill shock” when they open their operator invoice at the end of the month is still very real.

If anything, we think that long term, NFC-based services have by far the biggest potential as a mobile payment mechanism , not least because the same operators that are hedging their bets with Payforit, as well as all the major handset manufacturers, have invested a lot of time and money in developing the technology and trialing services. Already used widely in Asia, commercial offerings will begin appearing in 2008. NFC technology lets users pay for anything they would normally buy while out and about via a short range wireless connection between a special chip in their mobile device and a reader situated at a retailers till, station ticket booth or other point of purchase. It’s easy to use, convenient, mobile centric, connected to users existing bank and credit card accounts (so no mobile bill shock), and also provides opportunities for onsite interactive marketing and the delivery of a variety of other information- or commercial services. In short, we think NFC has more chance of persuading you to ditch your wallet than the likes of Payforit.

Hamish M.
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Entry filed under: 2shop4, mobile applications, mobile payment systems, near field communications, nfc, payforit, paypal mobile.

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1 Comment

  • 1. Michelle Huet  |  September 8, 2007 at 1:50 pm

    Why wouldn’t you get Bill Shock on your bank account?

    The idea that people check this a lot less frequently doesn’t stand because most people are prepay so would have a very good idea of their balance (some are even notifiied after after every billed item by flash SMS from their operator)

    I also believe most contract mobile subscribers (the vast minority) have direct debit set up and so the mobile bill shock is one and the same as a bank bill shock.

    There is also no reason Pay4it cannot/will not integrate with NFC solutions.

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