Mobile Payment In Eurasia: <i>More</i> Than A World Apart

Making U.S. retail mobile payment efforts look, by comparison, about as modern as a rotary dial telephone, major European and Asian retailers have been pushing ahead on pay-by-phone efforts, especially in the last six to ten months, according to the London-based consulting/analysis group Planet Retail.

"After dozens of failed projects in the last ten years, the time is ripe for payments by mobile phone at retailers' checkouts," said the report. "Powerful initiatives in France and the Netherlands, initiated by the likes of Carrefour, Ahold and Auchan, may be strong enough to set European, perhaps even global, standards for mobile phone payments."

In many parts of the world, the growth of M-Commerce is strongly linked with the acceptance of contactless payment. Once the contactless mechanisms are in place, it's relatively easy to integrate it with cellphones. A classic example of this relationship is happening in France, where grocery chains Carrefour, Auchan and Intermarché have been working with retailers Fnac, Castorama, Decathlon and Leroy Merlin to merge payment, loyalty cards and couponing and have it all on a consumer's PDA.

"The idea - to bring everything onto one single platform. A platform that the customer is always carrying: the mobile phone," the report said. "Carrefour has already announced larger field tests for late 2009, followed by roll-outs in 2010."

One of the advantages that France, which still eludes the U.S., is active cooperation within the financial community. "The seven largest French banks and the three French mobile phone network operators joined forces as Payez Mobile to turn the customer's mobile phone into the wallet or the purse of the future," said the report. It added that Payez Mobile executives are confident it will be able to finalize all specifications by the end of this year, enabling major roll-outs in 2010.

"Already in the second quarter of 2009, Payez Mobile will publish the first version of its standards. Carrefour, Auchan, Intermarché and their partners in the Ergosum project are already in talks with Payez Mobile," Planet Retail said, although Payez Mobile is "only setting specifications for mobile phone payments and not for loyalty schemes and couponing on mobiles, both longer term goals."

At one Auchan store, consumers were required to edit a Web-based shopping list.

The report also noted some fringe efforts, leveraging other parts of the phone. "There are still dozens of other projects for mobile phone payment on the market, most of them based on text messages (SMS) and the mobile internet standard WAP," it said. "Although these projects are still of interest for services such as content downloading or topping up mobile phones, it is unlikely they will play a significant role in payment at retail stores' checkouts."A common theme among contactless and mobile payment trials is that the plans are often less aimed at taking transactions from credit and debit cards than converting cash purchases into electronic transactions. In the French Payez trial, they are trying to figure out the amount limit to require a PIN.

"If the amount is less than EUR20, the customer simply places the phone in front of the terminal and the payment is made and the receipt is printed out. The process is similar to that of the contactless cards such as MasterCard's PayPass, Visa's PayWave or, in the U.S., AmEx's Expresspay. If the amount exceeds EUR20, the participating customers in France enter a PIN on the mobile. To complete payment, the shopper then places the phone in front of the terminal once again. The payment is made and the receipt will then be printed out," the report said. "The promising combination of passive mode for small amounts and active mode for large amounts seems to be a sensible support for the retailers' aim to phase out cash. However, not all stores participating in the French Payez Mobile are willing to risk unauthorized payments of below EUR20. In these cases, the customer has to activate a 'pay' function on the phone's menu, enter a PIN and finally place the phone in front of the terminal. Compared with earlier WAP or SMS-based forms of mobile phone payment, this procedure is very lean, user-friendly and, last but not least, very quick."

In Japan, some major chains have taken trust-but-verify to the next level. A couple of years ago, the largest grocery retailers in Japan, AEON and Seven & I, both started their own mobile electronic payment systems called WAON and Nanaco.

"Differently from the European approaches, the Japanese Nanaco and WAON e-cash systems are pre-paid," the report said. "The customer first has to top-up the card or phone before using them for payment. If a mobile phone is used, its credit can be topped up from anywhere using a credit card."

Germany's Metro Group has been pushing mobile payment for years. Metro Group gave about 100 customers Nokia mobile phones, but they had to "feature not only NFC technology, but also cameras with auto-focus. Only with auto-focus are the phone's cameras able to replace laser technology for barcode scanning," the report said. Metro also had to make sure that the in-store systems, which gave customers product information and the latest pricing discounts, would be automatically deactivated once the consumer left the store "to prevent competitors from gaining access to sensitive pricing information."