State of the Art Review of
`Mobile Payment Technology
`
`David McKitterick and Jim Dowling
`
`Department of Computer Science
`Trinity College Dublin
`David.McKitterick@cs.tcd.ie, Jim.Dowling@cs.tcd.ie
`
`
`
`
`
`Introduction
`
`Mobile payments will gain significant traction in the coming years as the mobile and
`payment technologies mature and become widely available. Various technologies are
`competing to become the established standards for physical and virtual mobile payments,
`yet it is ultimately the users who will determine the level of success of the technologies
`through their adoption. Only if it becomes easier and cheaper to transact business using
`mobile payment applications than by using conventional methods will they become
`popular, either with users or providers.
`This document is a state of the art review of mobile payment technologies. It covers all of
`the technologies involved in a mobile payment solution, including mobile networks in
`section 2, mobile services in section 3, mobile platforms in section 4, mobile commerce
`in section 5 and different mobile payment solutions in sections 6 to 8.
`
`
`Mobile Network Technologies
`
`Mobile network [1] technologies have evolved from analog based systems to digital
`based systems and from circuit switching to packet switching technologies. This
`evolution can be described by different generations of mobile technologies, i.e. first-
`generation (1G), second-generation (2G), 2.5G and third-generation (3G) technologies.
`Only 1G is based on analog technology. Some of the main standards for each generation
`technology are:
`
`
`(cid:1) 1G: Advance Mobile Phone System (AMPS) in North America, Total Access
`Communication System (TACS) in UK, Nippon Telegraph & Telephone (NTT)
`in Japan, Code Division Multiple Access One (CDMAONE).
`(cid:1) 2G: Global System for Mobile Communication (GSM), Code Division Multiple
`Access 2000 (CDMA2000), High Speed Circuit Switched Data Technology
`(HSCSD).
`(cid:1) 2.5G: General Packet Radio System (GPRS), Enhanced Data Rate for GSM
`Evolution (EDGE).
`(cid:1) 3G: Universal Mobile Telephone Standard (UMTS).
`
`
`
`1
`
`Exhibit 1028
`IPR2015-01219
`
`

`
`GSM
`
`Global System for Mobile Communication [1] is a second generation standard for mobile
`communication, developed by the European Telecommunications Standards Institute
`(ETSI) and now currently owned by the Third generation Partnership Project (3GPP).
`Operating in the 900 MHz and the 1800 MHz frequency band [2], GSM is the most
`widespread mobile standard currently in use across Europe and the Asia-Pacific region.
`Recently it is believed that GSM technology is in use by more than one in ten of the
`world’s population [18] and it is estimated that at the end of 2002 there were 787 million
`GSM subscribers across the 190 countries of the world. By late 2003 or early 2004, it is
`forecast that the global GSM market will reach the one billion subscriber mark.
`
`GSM was designed using digital techniques, unlike with previous analog cellular systems
`like AMPS in the US and TACS in the United Kingdom. The techniques [1] used are a
`combination of Time Division Multiple (TDMA) and Frequency Division Multiple
`Access, which are primarily for voice transmission and control. Since all users must share
`a limited radio spectrum, these techniques are used to divide the bandwidth among as
`many users as possible. Also, Space Division Multiple Access is used to provide a system
`based on a series of base stations each covering a limited area. FDMA [19] divides the
`radio frequency into several frequency carriers of 200 Hz, while TDMA enables 8 voice
`channels in each 200 Hz carrier by dividing each one in time.
`
`GSM Services [19]:
`
`
`(cid:1) Teleservices: telecommunication services can be divided into bearer services,
`teleservices, and supplementary services. The most basic teleservice supported by
`GSM is telephony.
`
` Data Services:
`o Internet Services: GSM users can send and receive data, at rates up to
`9.6K bps, to users on POTS (Plain Old Telephone Service), ISDN, Packet
`Switched Public Data Networks, and Circuit Switched Public Data
`Networks.
`o SMS (Short Messaging Service): unique to GSM technology, SMS is a
`bidirectional service for short alphanumeric (up to 160 bytes) messages.
`(will be discussed later in more detail)
`o Facsimile: Sending and receiving of fax messages, using a GSM phone
`and a laptop computer.
`o Secure Corporate LAN Access: secure access to e-mails, faxes, and file
`transfer via an encrypted link to a corporate LAN.
`
` (cid:1)
`
`
`(cid:1) Supplementary Services: [1] Such services include call forwarding, call barring,
`caller identification, call waiting and multiparty conversation. These services can
`be controlled via service applications using a GSM network API, such as those
`specified by the Parlay Group, allowing application developers to access GSM
`network capabilities.
`
`
`
`2
`
`

`
`
`GSM technologies are limited due to its low data transmission speed, therefore with the
`growth in data services the long term future of GSM is uncertain, unless it is changed to
`offer high bandwidth data services. Also, internet browsing using GSM phones is subject
`to charging of on-line duration and reconnection is necessary for each browsing session,
`as opposed to with GPRS (General Packet Radio Service), charging is based on the data
`received or viewed, with all time connectivity is available.
`
`
`
`HSCSD
`
`High Speed Circuit Switched Data [1, overview] is circuit switched protocol based on
`GSM, providing an enhancement of data services. HSCSD enables higher rates by using
`multiple channels as apposed to single voice channel with GSM. Transmissions rates can
`be up 57.6 Kbps by using 4 radio channels simultaneously. Typically, HSCSD [1] was
`directed at mobile PCs rather than smart phones, where a PCMCIA card is used with
`transmission speeds of 42.3 Kbps downstream and 28.8 Kbps upstream. HSCSD was
`intended as a temporary substitute for GPRS, to improve the transmission rates of
`existing mobile data applications.
`
`
`
`GPRS
`
`General Packet Radio Service [2] is packet switched wireless protocol providing non-
`voice value added services that allows information to be sent and received across a
`mobile telephone network. It is described as a 2.5G technology which supplements
`Circuit Switched technology such as GSM. Data transmissions speeds go from 9.6 kbps
`to a theoretical maximum speed of up to 171.2 kbps are achievable with GPRS using all
`eight timeslots at the same time. In addition to higher data rates, GPRS provides users
`with all time connectivity while only charged for the data viewed or received with a
`minimal on-line charge. GPRS is an evolutionary step towards 3G technologies, such as
`EDGE (Enhanced Data GSM Environment) and UMTS (Universal Mobile Telephone
`Service).
`
`GPRS [1] may be considered as an overlay network on the GSM networks, using the
`GSM resources to the fullest potential. To enable this, extra network elements are
`required for this packet based mobile network. Certain hardware elements are added to
`provide the IP infrastructure needed for packet based services. The SGSN (Serving GPRS
`Support Node) and GGSN (Gateway GPRS Support node) are the mobile network
`equivalents of routers and gateways. Other main additions are the upgrading with new
`software to existing cellular infrastructure.
`
`GPRS [19] only uses its radio resources when users are actually sending or receiving
`data, therefore the available radio resource can be concurrently shared between several
`
`
`
`3
`
`

`
`mobile data users, rather than dedicating a radio channel to a single user for a fixed
`period of time. This efficient use of scarce radio resources means that large numbers of
`GPRS users can potentially share the same bandwidth and be served from a single cell.
`GPRS [1] uses the same radio channel as voice calls, a channel that is 200 kHz wide and
`which carries a raw digital radio stream of 271 kbps. For voice calls this channel is
`divided into 8 separate data streams, each carrying about 34 kbps. After protocol and
`error correction overhead, 13 kbps is left for each voice connection or about 14 kbps for
`data. Packet-switched data can use several channels where as circuit-switched data uses
`one voice channel. GPRS can combine up to 8 of these channels, and with 14 kbps of
`data throughput each, the delivered bandwidth can be up to 100 Kbps. Most economical
`phones will be ones that are limited to 56 kbps, as not all eight voice channels have to be
`used. A mobile station can request the amount of bandwidth it desires at the time it
`establishes a data session.(cid:1)
`
`GPRS applications includes Intranet access, Internet access, E-Mail, Fax, and Unified
`messaging, using a single mailbox for all messages, including voice mail, faxes, e-mail,
`short message service (SMS), and pager messages.
`
`Limitations of GPRS [1, 19]:
`(cid:1) The limited cell capacity during voice and GPRS transmission calls. The use of a
`bearer for a different type of radio resource, such as SMS, would better utilize the
`cell capacity.
`(cid:1) Achieving the theoretical maximum GPRS data transmission speed of 172.2 kbps
`would require a single user taking over all eight timeslots which is unlikely that a
`network operator will allow all timeslots to be used by a single GPRS user. The
`bandwidth available to a GPRS user will therefore be severely limited.
`(cid:1) Suboptimal Modulation - GPRS employs a modulation technique called Gaussian
`minimum-shift keying (GMSK) while the EGDE uses a new modulation
`technique to allow a much higher bit rate across an air interface, called eight-
`phase-shift keying (8PSK) modulation. This type of modulation is used for 3G
`systems, so upgrading to 3G technology seems inevitable for a network operator.
`(cid:1) Transit Delays - GPRS sends data packets through different channels to reach a
`destination, therefore data corruption or data loss may occur. Data integrity and
`retransmission capabilities are used to avoid this, but the result is that potential
`delays can occur.
`(cid:1) No Store and Forward - Unlike SMS technology, GPRS doesn’t provide a store
`and forward mechanism for data transmission, therefore SMS may be need to
`enable sending and receiving of short messages.
`
`
`
`EDGE
`
`Enhanced Data for Global Evolution [2] is a higher bandwidth version of GPRS
`permitting transmission speeds of up to 384 Kbps. It is compatible with the GSM
`protocol, but it requires higher quality radio signals to reach the increased speed.
`
`
`
`4
`
`

`
`Deploying EDGE will allow mobile network operators to offer high-speed, mobile
`multimedia applications. It allows a migration path from GPRS to UMTS, because the
`modulation changes that will be necessary for UMTS at a later stage will already be
`implemented. A number of mobile operators are considering implementing EDGE as an
`interim data technology between GPRS and UMTS, but no investments have been made
`in this technology as yet. The opportunity window for EDGE may be very short, unless
`major delays occur during UMTS deployment.
`
`
`
`3G
`
`3rd generation [2] is the generic term for the next big step in mobile technology
`development. The formal standard for 3G is the IMT-2000 (International Mobile
`Telecommunications 2000). There are three optional modes as part of the 3G standard.
`W-CDMA (Wireless Code Division Multiple Access) is for Europe and for the Asian
`GSM countries, CDMA (Code Division Multiple Access) is for North America, and then
`TDD/CDMA (Time Division Duplex/CDMA) for China.
`
`
`UMTS
`
`Universal Mobile Telephone System [1] is designed to provide for 3G mobile data
`services. Realistic expectations suggest a maximum capacity in metropolitan areas of 384
`Kbps, at least until 2005. The same transmission rate can be achieved much earlier with
`EDGE. This third generation mobile phone system is already available in Japan [2]. The
`system enables the transmission of video, data and voice communication at a high speed
`and low cost.
`
`
`CDMA
`
`Code Division Multiple Access [1] is a proprietary standard for mobile communication,
`where GSM is an open standard. CDMA was pioneered by Qualcomm and enhanced by
`Ericsson. Both standards are in competition for dominance in the cellular world. CDMA
`is adopted mostly in US where it has a large subscription base. CDMA is a spread
`spectrum technology, which means that it spreads the information contained in a
`particular signal of interest over a much greater bandwidth than the original signal. A
`CDMA call starts with a standard rate of 9.6 kbps, which is then spread to a transmitted
`rate of about 1.23 Mbps.
`
`5
`
`
`
`
`
`

`
`Mobile Service Technologies
`
`
`SMS
`
`Short Messaging Service [1] was created as a part of the GSM Phase 1 standard to send
`and receive short text messages, of 70-160 alphanumeric characters in length, to and from
`mobile phones. The number of characters which can be sent is dependent on the language
`in use, with language support limited to the European Languages, Chinese and Arabic.
`This service is widely popular in Europe and Asia while in the US it is practically non-
`existent. SMS requires digital wireless interface standard (GSM) which is slowly being
`adopted in the US. In the US the ‘mobile-party-pays’ pricing model is commonly used, so
`mobile users pay for incoming as well as outgoing calls. Similarly this is the case with
`text messaging, so paying for messages received will not help the adoption of SMS in the
`US.
`
`SMS is a smart service, as it can store messages when to the target mobile device is
`switched off and forwards the messages when the unit is again in use. SMS applications
`are voicemail/fax notifications, delivery of replacement ring-tones, operator logos and
`group graphics, unified messaging, personal communication (text messaging), and
`information services. Basically, any information that fits into a short text message can be
`delivered by SMS.
`
`In 2002, there were about 24 billion SMS messages sent per month within the Global
`GSM world, according to a European SMS Guide, by Netsize [20]. The majority of these
`were peer-to-peer (mobile-to-mobile) text messages at around 90% of SMS traffic, and
`the remaining 10%, were mobile transaction services such as news, stock prices, weather,
`horoscope, etc. SMS continues to grow more as a payment medium, e.g. reverse SMS
`billing, premium SMS numbering, and as a combination with advanced messaging
`solutions built around instant messaging via GPRS or e-mail.
`
`
`
`WAP
`
`Wireless Application Protocol [1] is a technology which provides a mechanism for
`displaying internet information on a mobile phone or any wireless device. This is done by
`translating internet information in to a format which can be displayed within the
`constraints of a mobile device. WAP is an open standard, developed by the WAP Forum,
`which has over 500 members. Its founder members include the major wireless vendors of
`Nokia, Ericsson and Motorola, plus the US software company, Phone.com (formerly
`Unwired Planet).
`
`To obtain Internet access on a mobile device, the device should be WAP-enabled and the
`web site information should be described in WML (Wireless Markup Language) format.
`
`
`
`6
`
`

`
`WML is the mobile equivalent to HTML for web pages. A WAP gateway is also
`necessary between the client mobile device and the WML host server, to translate the
`WAP request. The response from the host server is translated into a WAP response by the
`WAP gateway, which can be displayed on the mobile device. An application
`environment, called WAE (WAP Application Environment), is defined by the WAP
`standard to enabling the development of advanced services and applications. These
`include micro-browsers, scripting facilities, e-mail, www-to-mobile messaging, and
`mobile to telefax access.
`
`There has being difficulties with the launch of WAP, especially in Europe, due to the
`slow speed and high charges when using WAP on GSM technology. The increase use of
`GPRS will see an increase popularity of WAP usage. WAP has been very popular in
`Asia, except in Japan where I-mode is dominate in this market. WAP is an open standard
`in contrast to I-mode, which is a proprietary standard. Also, there are difficulties with the
`configuration of a WAP phone for new WAP services. 20 or so different parameters are
`needed to be entered to gain access to the WAP service, which may discourage users.
`
`
`I-Mode
`
`I-mode (I stand for information) [1] is a wireless technology developed by a Japanese
`company called NTT DoCoMo, which enables uses to access Internet services via their
`cellular phones. I-Mode can be used to exchange e-mail with computers, personal digital
`assistants (PDAs) and other I-Mode cellular phones. I-Mode has already dominated the
`Japanese market and is being considered a success story in the world of M-Commerce.
`
`I-Mode's underlying technology is uncomplicated, which makes it easy for content
`providers to create new I-Mode services and easy for customers to find and use them. The
`service is based on the Asian cellular standard PDC and uses Compact HTML (cHTML)
`markup language [3]. cHTML [2] is basically a scaled down version of HTML. It is
`relatively easy and it takes little time to rewrite HTML into cHTML. I-Mode’s
`transmission speed is just 9.6kbps, but fast enough for its services. DoCoMo operates a
`packet-switched network, which means that customers pay not for time elapsed but for
`the packets of data they download. Packet switching also means that I-Mode is always
`on, so customers don't have to log into the service or wait for a connection, but have
`immediate access to services, similarly with GPRS.
`
`
`
`USSD
`
`Unstructured Supplementary Services Data [1] is a mechanism of transmitting
`information via a GSM network. Similar to SMS, but it is only basically a store and
`forward service. USSD offers a real-time connection during a session. It is said that
`USSD will grow with the further market penetration of WAP. Its main uses will be for
`mobile financial services, shopping and payment.
`
`
`
`7
`
`

`
`Cell Broadcast
`
`Cell broadcast [1] is a technology that is designed for simultaneous delivery of short
`messages to multiple mobile users within a specified region or nation-wide. Cell
`broadcast is similar to SMS, but it is a one-to-many service rather than a one-to-one or
`one-to-few. It is a mass distribution media mainly for news and generic information.
`Usually, cell broadcast services are distributed to the consumer on a no cost basis. The
`network operator charges the content provider for sending the messages and the content
`provider will try to make money on follow-up services.
`
`
`SIM Toolkit
`
`SIM Toolkit [4] is an ETSI/SMG standard for value added services and e-commerce
`using GSM phones to perform the transactions. SIM Toolkit programmed into the special
`GSM SIM card enables the SIM card, using the GSM handset, to build up an interactive
`exchange between a network application and the end user and access or control access to
`the network. Therefore, it provides the SIM card with a proactive role in the handset. This
`means that the SIM initiates commands independently of the handset and the network.
`SIM Toolkit [1] is targeted at phones that do not yet fall into the smart phone category.
`Although SIM Toolkit was being heavily pushed by the smartcard industry, it will be an
`interim technology and will not be able to survive once GPRS terminals take over the
`market, since WAP is be the GPRS-supported protocol.
`
`
`Web Clipping
`
`The Web Clipping [1] service for 3Com’s Palm handheld device has been very
`successful, utilizing Palm’s 75% market share of PDA market in the US. Web clipping is
`a Palm proprietary format for delivery of web-based information to Palm devices via
`synchronization or wireless communication to the Palm platform. Web clipping may co-
`exist with WAP in the fragmented US market. However, in Europe it is likely to be
`superceded, even on the Palm platform, by WAP based services.
`
`
`MExE
`
`The Mobile Station Application Execution Environment [1] is the incorporation of a Java
`virtual machine into the mobile phone, allowing full application programming. The
`protocol is integrating location services, sophisticated intelligent customer menus and a
`variety of interfaces, such as voice recognition. MExE will incorporate WAP, but also
`provides additional services exceeding the WAP functionality.
`
`
`
`8
`
`

`
`Mobile Platforms
`
`Mobile Operating Systems
`
`Symbian [5] was formed from Psion (UK PDA manufacturer) Software by Nokia,
`Motorola, Psion and Ericsson in June 1998. In 1999 Matsushita (Panasonic) and in April
`2002 Siemens joined the Symbian group. It was based on Psion’s earlier software, EPOC
`operating system. It was a modular 32-bit multitasking operating system especially
`designed for two types of mobile devices: smart phones and communicators. After EPOC
`release 5, the operating system was renamed ‘Symbian OS’. Symbian is a joint venture
`between leading phone manufacturers formed to develop a common operating system
`suitable for mobile communication devices. The operating system is quite simple:
`Symbian develops and licenses Symbian OS containing the base (microkernel and device
`drivers), middleware (system servers, such as the window server), a large set of
`communication protocols, and a test user interface for the application engines of the
`operating system.
`
`The Series 60 Platform [5] (Smartphone Platform), designed for Symbian OS, supports
`mobile browsing, multimedia messaging service (MMS) and content downloading, as
`well many personal information management and telephony applications. The Series 60
`Platform 1.0 provides communication technologies needed in smartphones such as e-
`mail, WAP 1.2.1 stack, SyncML, MMS, Bluetooth and GPRS. This platform creates a
`larger developer base and thus creates more content for use on smartphones.
`
`Microsoft has developed a lighter version of its Windows operating system, called
`Windows CE that has been created especially for small palm-size, hand-held PCs and
`other consumer electronics devices. A large number of handheld computer/PDA
`manufacturers mostly coming from the PC industry, such as HP, Casio, Philips and
`Compaq, have developed their devices around CE. However, CE has faced problems
`surrounding ease of use, robustness, synchronization and memory requirements.
`Windows CE is now renamed as Windows Pocket PC.
`
`3COM is the smallest player for mobile terminal operating systems, but it is the global
`market leader in the PDA market (72% according to IDC in 1998) with the Palm Pilot
`product and its proprietary OS [1]. The operating system is regarded to be inferior to its
`competitors’, but the Palm is much simpler to use in both software and hardware terms.
`3COM has spun-off its Palm division (Palm Inc.) in 2000. The Palm OS has a particular
`wide acceptance in the US, where the Palm VII with its wireless connectivity and web
`clipping technology has hit the market already.
`
`Wysdom has recently developed a mobile network operating system called Wysdom
`MAP-OS [10]. It is the mobile industry's first complete service delivery platform
`designed exclusively to meet the challenges mobile operators face in delivering feature
`and margin-rich mobile data services to their consumer and enterprise customers,
`according to Wysdom.
`
`
`
`9
`
`

`
`Mobile Commerce
`
`The increase in mobile commerce [6] services and demand for these services is affected
`by the current mobile networks in existence. 2G networks are not designed to support
`data services, therefore providing slow connection speeds and limited choice of
`applications. With the increase deployment of 2.5G packet-switched networks and the
`imminent deployment of 3G networks, users will have access to an internet experience as
`good as PC-based access with the added benefit of their mobility. This provides an ideal
`environment for payment of content (digital and physical goods) and services.
`
`Mobile payment can be divided into three areas: Mobile Operator Payment, Out-of-Band
`Payment and Proximity Payment. These will be discussed in sections to follow.
`
`
`
`Mobile Payment Principles
`
`The mobile payment value chain has various roles which need to be managed [18]. Such
`roles may be service or product providing, consumer authentication, payment
`authorization and payment settlement. In a general sense these roles can be assigned to
`four actors of the payment system; the consumer, the content provider/merchant, the
`payment service provider (PSP) and the trust third party (TTP).
`
`The consumer is the person owning the mobile device and is willing to use it to pay for a
`service or product. In this report I refer to the consumer as the mobile user. The product
`or service, maybe are physical content (products or services) or downloadable digital
`content. The mobile user’s roles may involve initializing the mobile purchase, registering
`with the PSP and authorizing the payment.
`
`The content provider or merchant, depending on whether digital content or physical
`goods and services are being purchased, is someone or some organization that sells
`products to the consumer. Their roles may involve forwarding purchase requests to the
`PSP, relaying authorization requests back to the consumer and delivery the content. In
`this report I refer to this actor always as the content provider.
`
`The payment service provider is the party responsible for the payment process. They
`control the flow of transaction between the mobile consumer, the content provider and
`the TTP. A consumer may be register with the PSP to avoid repetition of keying payment
`details into the mobile device, such as credit card details or a mobile phone post-paid
`account. A PSP could be a network operator, a bank, a credit card company or an
`independent payment vendor.
`
`
`
`
`10
`
`

`
`
`
`Figure 1: A Mobile Payment System
`
`The trusted third party is a company used to perform the authentication and the
`authorization of transaction parties and the payment settlement. These could be network
`operators, banks and credit card companies. Therefore, their main role is authentication
`and authorization of payment requests. A network operator or bank could be positioned at
`the same time as the PSP, the TTP, and the content provider. In this report I do not refer
`to the TTP, and I assume that the PSP is responsible for all its roles, as it may be in many
`cases.
`
`
`
`Figure 2: A Mobile Payment System with participation from a TTP
`
`
`
`Mobile payment may be characterized into various categories, such as transaction type,
`transaction settlement method, content type, and content value.
`
`
`
`
`
`
`11
`
`

`
`Transaction Type:
`
`
`(cid:1) Pay Per View – the mobile user pays for each view, or increment, of the desired
`content. For example downloadable MP3 files or video clips.
`(cid:1) Pay Per Unit – the mobile user pays for each unit of content provided by the
`content provider. Units can be based on volume or duration of content, such as
`per byte or per minute. The amount of units used for each session will be billed
`to the consumer. Such examples of this type could be used in downloadable
`games or streaming video content.
`(cid:1) Flat Rate – the mobile user pays a recurring periodic amount to access the
`content on an unlimited basis during the period. For example unlimited access to
`online newspaper articles.
`
`
`Transaction Settlement Type:
`
`
`(cid:1) Pre-paid – mobile users pay in advance of obtaining the content with pre-paid
`accounts which are deducted after each payment session.
`(cid:1) Post-paid – mobile users receive and use the content before they paid for it. The
`consumer is billed after the access to the content is obtained, for example on a
`phone bill.
`
`
`Content Type:
`
`
`(cid:1) Digital goods – e.g. downloadable music or video content, value-added
`information
`(cid:1) Physical goods and services
`(cid:1) Voting - e.g. TV voting polls
`(cid:1) Ticketing – e.g. booking plane tickets
`
`
`Content Value:
`
`
`(cid:1) Micropayments – describes same purchases usually less the 10 Euro, for example
`pay parking and ring tones.
`(cid:1) Marcopayments – usually large purchases over 10 Euro, for example purchasing
`plane tickets.
`
`12
`
`
`
`
`
`

`
`Payment Scenarios
`
`Content Download
`
`
`Figure 3: Payment System for Content Download
`
`
`
`
`In this payment scenario, the content provider offers digital content to mobile users. The
`content can be purchased by either a metered or event pricing model.
`
`Metered content may be a streaming service, such as a video, a radio channel or an on-
`demand game service. The payment of the transaction is dependent on a metered quantity
`of the provided service, such as the duration of the service, the data volume delivered, or
`type of gaming sessions (e.g. different levels).
`
`
`Event content may involve the full download of digital content, in which the consumer
`pays a predefined price per item downloaded. The transaction is dependent on a
`successful download, as the content is worth the purchase price only when it is complete
`downloaded. This pricing mode may also cover recurring charge agreements or
`subscriptions, e.g. to a monthly online magazine subscription.
`
`The content may also be purchased via a PC internet connection, where the mobile device
`will be used to authorize the payment transaction and authentication the content recipient
`as the mobile user.
`
`
`
`Once a service request is made by the mobile user to the content provider, then the
`content provider will initiate a charging session with the PSP. The PSP will seek
`authorization from and authentication of the mobile user to complete the payment
`transaction, using either a post-paid or prepaid method.
`
`13
`
`
`
`
`
`

`
`Point of Sale
`
`
`
`
`Figure 4: Payment System for Point of Sale
`
`In this payment scenario, the content provider or merchant will offer services or the sale
`of goods to the mobile user, at a point of sale, e.g. paying for a taxi service or purchasing
`a physical good in a shop. The payment will be initiated at the point of sale by the content
`provider. The PSP may request authorization from the mobile user either directly, such as
`a sms pin request, or indirectly via the content provider, such as using a wireless
`Bluetooth link.
`
`Also vending machine scenarios apply here. A mobile user can pay for goods and
`services at a machine, such as buying public transport tickets or paying for parking.
`Identification of the mobile user may also involve using a wireless link such as Bluetooth
`or Infra Red. A sms pin request may also be involve for authentication
`
`
`
`Content on Device
`
`In this payment scenario, the content may already exist on the mobile device, in which
`the use of this content may involve obtain a license. The license may be based on usage,
`duration or number of users. Such content using this scenario will be an on-demand
`gaming service. In this scenario, the license is a form of content which payment is
`required to obtain it.
`
`
`
`
`14
`
`

`
`Figure 5: Payment System for Content on Device
`
`
`
`
`
`Mobile Payment: Mobile Operator Payment
`
`Network Operators are suited to deliver payment services for mobile content due to their
`expertise in the area of billing. This type of payment is sometimes referred to as “in-
`band” [6], where the content and the payment channel are the same, e.g. a chargeable
`WAP service over GPRS. Mobile users will either be offered subscription or per usage
`payment models, with the amount of payment usually being small, i.e. micropayments.
`Applications that could be covered by in-band transactions included video streaming of
`sports highlights or video messaging. An example of this is: Bob is on holiday, and uses
`his smartphone to take a photo, adds audio comment, and sends it via MMS (Multimedia
`Messaging Service) to Tom. He is charged 1 Euro to her prepaid account. This would use
`MMS and 2.5G technologies, involving a mediation system integrated with real-time
`stored value micropayment system.
`
`
`Network Operator Payment Systems
`
`Mediation systems provide the systems to manage the charging models and integrate with
`various payment methods, such as billing systems and prepay systems [6]. Operators are
`generally not interested in providing a standalone payment application because charging
`and payment are at the centre of their wireless data systems and form part of the network
`operator’s infrastructure.
`
`O