Using a mobile phone to make direct payments could become the norm in Europe following cooperation announced between the GSM Association (GSMA), which brings together the world’s major mobile operators, and the European Payment Council (EPC), the body representing the EU banking sector.
The first widespread deployment of the new payment system is expected by late 2008 or the beginning of 2009, David Pringle, a spokesperson for the GSMA, told EURACTIV. At the moment, several trials are being carried out across the world. In Europe, the pilot country is France, where retailers are installing terminals to allow contactless payments to go ahead.
According to the GSMA-EPC plan, payments would be carried out through a so-called “trusted service manager,” an intermediary between banks and mobile operators. This third party is necessary because in different EU countries telecom companies are not allowed to act directly as payment providers. The role would in any case be fulfilled by banks.
However, the aim is to have a trusted service manager that can act “on behalf of a number of banks” to give customers the opportunity to choose between different financial institutions, the GSMA spokesperson said.
The EPC’s support is therefore key to the success of the project. The body brings together all the European banks that have agreed upon SEPA, the Single Euro Payment Area, which aims to make EU cross-border payments as easy as a domestic transaction by the end of 2010 (see EURACTIV 29/01/08).
The project enjoys the support of the major handset makers, such as Nokia, Samsung or Motorola, and of the payment card associations – particularly Visa and MasterCard, which will provide the updated applications for the telephone SIM cards and will process the payments, according to GSMA. Visa and MasterCard have even agreed to subsidise the deployment of retailers’ terminals in some countries.
The application of the new system will be worldwide. At the moment it is being trialled by the South Korean operator KTF, the Taiwanese FarEasTone, the US AT&T, the Turkish Turkcell and the French SFR and Orange. The Japanese operator SoftBank, which has already implemented the practice of payments through mobile handsets, is also involved, in order to prevent Japan from becoming “a technology island,” as an expert in the sector put it.