M-payment is short for mobile payment. It refers to the payment of goods and services via a cell phone. It is possible for two private individuals to exchange money with each other via m-payment (person-to-person, P2P) or, for example, to pay in a store or over the Internet using a cell phone.
Low acceptance in Germany
While m-payment is widespread in America, the German market is lagging far behind. According to a 2012 survey by management consultant Accenture, only eleven percent in Germany use mobile payment services. Almost two-thirds of the mobile Internet users surveyed said they had no interest in m-payment. This makes it clear that even the best system in Germany will not have an easy start in any case.
Pioneers: Premium SMS and value-added services
Ever since the first m-payment solutions emerged, experts have been striving to create a standardized solution that everyone can easily handle. Initially, premium SMS and value-added services seemed to emerge as the standard, with the amount to be paid being billed via the telephone bill. However, these methods were not able to establish themselves in the long term, as they are primarily designed for telecommunications services and for payment of smaller amounts. These m-payment methods are not suitable for paying for third-party services, such as an order in an online store.
No uniform solution available
The market for m-payment providers is highly segmented, and no clear market leader can be identified. Even the big names in the industry use different software products to process payments, which adds to the fragmentation of the market. In the area of hardware, more and more providers are focusing on “Near Field Communication” (NFC) technology, although this has still not become a fixed standard in Germany. This involves transferring an NFC-enabled credit card to the cell phone, thus enabling m-payment. In order to be able to pay via NFC, however, it is necessary that both the cell phone and the merchant at which one wants to pay with it support NFC. In many cases, however, this is not yet the case. Solutions that use the phone’s audio jack for payment are also becoming increasingly common. There are numerous initiatives, including SEMOPS, for example, that are working to develop a fixed standard for mobile payment that can be established throughout Europe.
Security in m-payment
M-payment enjoys a high reputation for security. A cell phone is a self-sufficient device that is difficult to influence from the outside. In addition, various identification features such as the IMEI, the telephone number or special logins are used to increase security. Further security mechanisms for m-payment are provided by the Near Field Communication and Global Positioning System technologies.
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