Ever since year 2001, Malaysians have been able to experience and enjoy a much more secure and convenient way of conducting mobile commerce. TeleMoney for instance was Malaysia's first mobile payment service via multi-channel access for Internet and wireless transcations.
Neowave, on the other hand, the first Malaysian company to be awarded with WorldPayAccredited Storebuilder, was also the first to integrate Mobile Money Weblink as a Payment option on their online storefont software. Other companies in Malaysia who have joined these two companies in providing such mobile payment systems include the following Cordoda Corporation, Nanyang Online, Xchange.com.my, HP Mobile e-services Bazaar and Celcom.
These are among some of the payment systems that are used:
But what are these mobile payment systems?
Mobile payment is one of the latest alternative payment method that is making waves in Asia and Europe, including Malaysia. Basically, consumers can use their mobile phones to pay for a wide range of services and goods, instead of using cash, such as :
a) Music, videos, ringtones, online game subscription or items, wallpapers and other digital goods
b) Books, magazines, tickets and other hard goods
Among the primary models for mobile payments include:
a. Premium SMS based transactional payments
Under this model, consumers send a payment request via an SMS text message to a shortcode to purchase goods such as music, ringtones, wallpaper, mobile games or to conduct transactions such as reloading or transferring credit for prepaid lines. A premium charge is then applied to their phone bill. When the merchant involved is informed of the payment success, the paid for goods will be released.
However, these goods are most frequently digital with the merchant replying using a MMS (Multimedia Messaging Service). As a trusted delivery address has typically not been given to these goods. A MMS can also deliver barcodes which can then be scanned for confirmation of payment by a merchant which can be used as an electronic ticket for access to cinemas and events or collect hard goods. The practice of delivering barcode through MMS is still however not popular in Malaysia.
This method of payment us now beginning to be taken over by bother mobile payment systems such as mobile web payments (WAP) and Direct Mobile Billing for several reasons:
- Poor reliability - Transactional payments can easily fail as messages get lost
- Slow speed - Sending messages can be slow and it can take hours for a merchant to get receipt of payment. Consumers do not want to be kept waiting more than a few seconds.
- High cost - There are many high costs associated with this method of payment. The cost of setting up shortcodes and paying for the delivery of media via MMS and the resulting customer support costs to account for the number of messages that get lost or are delayed.
- Low payout rates - Operators also see high costs in running and supporting transactional payments which results in payout rates to the merchant being as low as 30%.
- Low follow-on sales - Once the payment message has been sent and the goods received there is little else the consumer can do. It is difficult for them to remember where something was purchased or how to buy it again. This also makes it difficult to tell a friend.
b. Direct Mobile Billing
Consumers use this system during checkout at an e-commerce site, such as an online gaming site to make a payment. Consumers?mobile accounts are charged for the purchases after the PIN and One-Time-Password is authenticated. This is a an alternative payment method that bypasses banks and credit card companies all together, as it does not require any use of credit or debit cards or pre-registration at any online payment solution.
This method is very popular in Asia, as it provides the following benefits:
- Security - Two-factor authentication and risk management engine prevents fraud.
- Convenience - No pre-registration and no new mobile software is required.
- Easy - It's just another option during a checkout process.
- Fast - Most transactions are completed in less than 10 seconds.
- Proven - 70% of all digital content purchased online in some parts of Asia uses Direct Mobile Billing method.
c. Mobile Web Payments
WAP is where consumers download and install web pages or additional applications onto their mobile phones to make payments. Wireless Application Protocol (WAP) is used as the underlying technology.
These are amone the benefits of mobile web payments:
- Follow-on sales where the mobile web payment can lead back to a store or to other goods the consumer may like. These pages have a URL and can be bookmarked making it easy to re-visit or share with friends.
- High customer satisfaction from quick and predictable payments
- Ease of use from a familiar set of online payment pages Consumers in Malaysia are coping with these changes well, with the help of the followings:
- Low transaction and maintenance costs.
- Low start-up or sign up feess.
- No minimum monthly transactions, No Rental Fees.
- No merchants account required.
- Transactions can be done to anyone, anywhere & anytime.
- Flexible methods to Request for Payment: Fixed Line IVR, SMS, WebLink, Mobile Money website.
- Good audit trail and secure ticketing
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