Comparison of features of various mobile payment technologies

 

Technology	Secure	Universally compatible: No new hardware	Ergonomic (Usable)	Requires no software download	Confidential: respect user Privacy	Available
Near Field Communication (NFC)	ü	×	ü	×	ü	×
SMS/USSD	×	ü	×	ü	×	ü
SIM Tool Kit (STK) and JAVA	ü	×	ü	×	×	ü
NSDT™	ü	ü	ü	ü	ü	ü

Various Mobile Payment Channels Available before NSDT™ was created

NSDT™ Mobile Payment Technology

The following is an excerpt from a Mobile Money Transfer Report prepared by the GSM World Association: http://mmt.gsmworld.com/   Channels: The mobile channel that the consumer will adopt is a key deciding factor on which mobile payment technology to support. The channels identified are:   Client Side – SIM based/dependant applications JAVA/J2ME Server Side – USSD2 IVR  SMS  WAP Each channel presents differing benefits and concerns and can have an affect market adoption and the security of the application. Ironically the best technical and most secure solution (SIM) also has the highest barriers to implementation.   With SIM based/dependant applications it is understood that the consumer would have to either swap their SIM for another SIM bearing the application, or have the application downloaded to their SIM from the network. This has proven to be a stumbling block in many markets where consumers do not take to solutions that require consumer intervention in getting the application. SIM based applications are however the most secure in that the data can be encrypted on the actual SIM card and be transported from the device to the bank in an encrypted format. SIM-based applications do offer the ability to prevent churn in that the consumer SIM is owned by the network.   JAVA applications offer a higher level of aesthetic value for the user than SIM, but face the same accessibility problems in getting the application to the device. JAVA applications reside on the actual device and need to be downloaded by the consumer. This typically requires a GPRS connection to a network and knowledge of how to access the site from which the application needs to be downloaded. This application could pose an issue in the usability of the service if the consumer has not already configured GPRS on their phone. Once the consumer has the application on the phone they should not see any further problems. To alleviate the concerns around accessibility, MNO’s could have the application pre-installed on handsets as they saturate the market. This would mean that the consumer would not be affected by the download or settings required to operate the application. It is believed that that the source from which you are downloading the application cannot be verified by the consumer and steps should be put in place not to make the application publicly available but rather facilitate a download process as part of registering for the service. There is not immediate lock in of the consumer to the MNO on JAVA as it can communicate across any network. It is also a concern, as with any client side application, that consumers would have to reload the application if the bank/MNO were to modify the application in any way.   USSD2 is a channel that has been successfully used in mobile banking implementations as an alternative to menu driven SIM based applications, in markets where the bank or MNO believe that the consumer swap or download would affect the adoption rate. USSD2 does not offer the device level encryption of data and thus would require business rules and methodologies in protecting the consumer’s data. If the network supports USSD2, effectively each consumer can use the channel without affecting the SIM or the device.   IVR (interactive voice response) is DTMF tone entry in response to a voice based menu presented to the consumer. The most common channel for the consumer as the consumer knows how to make a call. The channel offers education on the phone in that the consumer can be instructed in their language. The channel has existed for many years as telephone banking and is thus not innovative or new to the banking world. It suits emerging markets or markets that do not have any other technology choice. The channel is seen to be expensive to the consumer that has to dial in to use the service at their going call tariff rate.   SMS based applications may be the simplest form of mobile banking implementation. The solution is not intuitive and has no aesthetic value but is as simple as sending an SMS. SMS is used primarily as an informational banking tool as opposed to transactional banking. The reason being that transactional banking requires certain levels of security, and while SMS is encrypted using the standard GSM encryption across the air, it is stored in the sent items of the consumers handset, and possible stored in the open at the network and at the vendor. There are examples of Transactional banking implementations on SMS where the risk has been managed through limitations in transaction amounts and data transmission.   WAP based solutions offer aesthetic value and a similar experience to that of the internet. It is device dependant and requires a GPRS connection with the network. Consumers usually do not know how to browse on their mobile phones or have not configured GPRS.

NSDT™ solves the problems encountered by other technologies and uses the phone’s audio channel to transfer secure transaction data. NSDT™ payment technology is of particular value to the retail environment in developing countries. Its natural application is to open the electronic payment business by allowing: any consumer phone to fulfil the function of a payment card, any retailer phone to act as a POS terminal, and any ATM to serve as a cash in/cash out mechanism. Because all phones have audio channels, any existing phone can use NSDT™ without modifying its hardware or software. Thus, unlike NFC and software based technologies, NSDT™ is universally available. This signature technology was designed specifically to address point of sales transactions with very fluid ergonomics, top security, and assurance of user privacy. The users do not have to share their phone numbers or any other personal information—it is completely confidential. Furthermore, the encrypted audio one time password employed in each transaction is completely secure and specifically targets the transaction (rather than phone passwords that only secure the unlocking or turning on of a phone). As a result, NSDT™ is uniquely suited to a retail context in which security and identity protection are a priority.   NSDT™ offers a “bottom-of-the-pyramid” application that provides a simple and immediate solution to the payment needs of emerging countries—while other technologies satisfy some of these needs, NSDT™ is the only technology to include all of the following advantages: Can be used on any phone Very high level of security (Smartcard grade one time password) Respect of privacy Voice-only services Independent from telecom operators Very fluid ergonomics Complete and secure transaction log (that can eventually function as a certificate of transaction deliverable by a third party) Optional low-cost NSDT™ compatible receipt printer (<50 U.S.D.) NSDT™ compatible recipt printer While some may assume that audio channel reliance requires users to expend talk-time on each transaction, various strategies can help absorb the cost of the call. NSDT™ transactions require less than a minute of talk-time; nonetheless, imposing this cost on users can be a disincentive to engaging in mobile payment. The rapid decrease in talk-time prices expected in the next few years is likely to ease this burden significantly; however an intermediary solution may be provided through a business model that absorbs the cost of the call by: providing users with a toll free number or using a call back number The cost of a toll free or call back number can be supported by either the payment service provider (who would negotiate prices with the local telecom operators) or the telecom operator (who would be interested in facilitating a technology that will increase consumption of services sold). Through these solutions, phone call costs to user can be avoided completely, making NSDT™ preferable to other solutions, such as many of those relying on SMS, which impose a cost on transactions.