Mobile News

The manner of device smart card architecture has ramifications for banks and mobile operators enabling m-payments. Models include:

* Dual-slot–the handset comes with an in-built smart-card reader. User inserts existing debit/credit card into the smart card reader slot and type in a bank-issued PIN for authentication. This solution inclines itself to pre-existing smart microprocessor authentication; the advantage is the use of a proven and trusted payment method. It allows a consensual approach between bank and operator yet allows organisations such as supermarket chains to interpose their own cards

* Dual-chip–a second banking chip (WIM card) that slots into the back of the handset near the SIM card–Merita NordBanken is implementing dual-chip systems. A second chip permits banks to introduce commercial applications that otherwise would be operator-controlled. Merita, for example, foresees the banking chip holding loyalty card applications. Moreover, alterations to handset design are minimised

* External WIM card reader–similar in philosophy to the dual-slot approach, it does, however, present the risk that consumers may find an additional device cumbersome

* SWIM single chip–all functions are lodged on a single, multi-application chip that combines the SIM and the WIM cards. The disadvantage for banks and credit card companies is that their brands are subsumed within a merged SWIM card as well as complications regarding who issues the card and thereby manages the customer relationship. The advantage for both manufacturers and operators is that only one slot is required (operators control and issue SIMs). Expense may be problematic but the operator leverage once such m-payment facility is in place would alleviate initial investment

* Payment software–although the easiest to introduce for handset manufacturers, a software-only solution would be most prone to hackers.

The issue of form factor neatly concatenates the interests of operator and banks as mobile banking services evolve towards payment solutions. This is reflected in the number of distinct standardisation initiatives. The source of conflict concerns the number of application layers on the SIM with operators favouring the SWIM and banks advocating separate functionality. Bank disintermediation could also occur through the expansion of core retail activity by retail chains such as Tesco. Savings available using the internet channel could be as high as 87-89% .