Framework for Mobile Payments Integration

Written By Fergal Carton

Jonas HedmanJan Damsgaard

Kay-Ti TanJ. B. McCarthy

Reviewed ByConrad FevrierPaul GriffithHeather Williams

A mobile payment is any payment where a mobile device is used to

initiate, authorize and confirm a transfer of value in return for goods and

services 

Mobile payments were suggested as an alternative for micro-payments at point-of-sales systems

Other mobile and payment methods have been implemented but most have failed due to lack of penetration

Enough merchants must implement a new payment method for it to catch on with consumers; however, in order for it to be appealing to merchants a large amount of consumers need to be interested.

Chicken and Egg

Experts and companies agree that mobile phones will be turned into the new wallets

If mobile phones do become the new e-wallets, it will probably be at the expense of traditional payment methods.

Transition to mobile phone driven not smooth due to lack of support

Lack of agreement between bank and customers

The high failure rate of mobile payment solutions

Banks promote payment instruments that earn them the most revenue

Problems

Many retail banks run back office payment processing systems which use legacy development environments such as COBOL and RPG

Legacy banking systems were not designed to empower customers

Problems

Financial Institutions should consult with hardware vendors, payment solution providers and trusted service managers

What needs to be done?

The process dimension refers to what type of payment is being made, and should include the notion of customer value.

The technology dimensions describe how a payment process works and involves the integration of a number of physical and virtual payment instruments

Classifying the dimensions of mobile payments

The value dimension described as a market perspective by Ondrus et al (2005) , or as a value taker perspective by Kauffman and Walden (2001)- relates to both customer benefits and needs respectively.

The Value Dimension

Nature of the goods, Where the payment is being made, Who is involved??

B2C B2B P2P P2NP G2C

The second dimension for mobile payment relates to the products, instruments or technologies through which the payment is executed.

The Integration Dimension

Initial Framework for Mobile Integration

Theoretical Framework Pilot Project

Methodology

Evaluation of the Pilot-Project The pilot project confirmed the issues

concerning value proposition

Definition: statement or reason that summarizes why

a consumer should buy a product or use a service-In particular why would this product or service add more value i.e. better solve the problem than similar offerings.

Pilot Project

Pilot Project Merchant agreed that the M-payment

system would be beneficial (save time).

Merchant was unwilling to pay to have the system installed at the 31 locations.

Theoretical Framework Based mainly on three works. Ondrus, J., Camponovo, G. and Pigneur, Y.

(2005), A Proposal for a Multi-perspective Analysis of the Mobile Payment Environment.

Proceedings from the International conference on mobile Business.

Kim,C., Mirsobit, M. and Lee, I. (2010), An empirical examination of factors influencing the intention to use mobile payment, Computers in Human Behavior, 26, pp. 310322.

Theoretic Framework Mallat, N. (2007), Exploring consumer

adoption of mobile payments - A qualitative study, The Journal of Strategic Information Systems, 16(4), pp. 413-432.

Validity -Three Aspects

Logical coherence Theoretical relevance Relative explanatory power

Theoretic Framework Lack of convincing value proposition to

customers.

mobile operators and banks focused on extracting revenue from customers.

Evaluation/Discussion

The paper was mostly well written.

There were a few minor to moderate miss-steps in the paper

Minor Miss steps Miss-wording use of the word

“connivance” instead of convenience

Definition: “Willingness to secretly allow or be involved in an

immoral or illegal act.”

Minor Miss-steps

Use of un-cited statistics

25-30% of Bank Revenues

900 Billion dollars

Evaluation -Relevance The paper is still relevant today.

The paper is till relatively current

There exists differences in option

Relevance TodayApple IPhone 5

Relevance

Apple IPhone 5: No need for NFC today Apple Senior VP Phil Schiller said “ Passbook alone does what most customers

want and works without [replacing] existing merchant payment systems.”

It's not clear that NFC is the solution to any current problem, Schiller said. "Passbook does the kinds of things customers need today."

Conclusion

The proper integration of mobile payment has its challenges