Mobile payment systems in Malaysia: Its potential and consumers' adoption strategies.

Nowadays, there is high potential for mobile telecommunication networks to become an important electronic payment channel in our country as mobile phone services will make life easier for everyone. Mobile payment system is a system using mobile devices to make monetary transactions such as pay bills, perform banking transactions or shop online beyond voices.

In Malaysia there are several companies that already launched mobile payment systems such as Celcom, Maxis, Digi, TMtouch, Maybank, Hong Leong Bank, Mobile Money International Sdn Bhd, and mobileExec Sdn Bhd.

Celcom (Malaysia) Berhad, Malaysia's premier mobile network with the widest coverage, and paybox, the trendsetting company for mobile payment solutions, will be launching a mobile Banking & mobile Payment solution for the Malaysian market. Mobile Banking (m-banking) and mobile Payment (m-payment) in Malaysia provide real-time banking and payment instructions that enable customers access to their current e-banking systems using a Java client on their phone. It allows customers to access their accounts at any bank, at a minimal investment by the participating banks. Besides, Celcom will expand the system to include other partners and provide extended remittance, bill payment and merchant payment services.

As for consumers shop and pay via mobile phones, Visa International collaborated with Nokia Corporation had introduce the world's first credit card payment pilot system in Malaysia recently, called "Mobile Visa Wave Payment Pilot". The backbone of the mobile payment system is Visa Wave smart card technology. The technology is equipped with sophisticated radio frequencies that eliminate the need to swipe credit cards into a reader. The service will be available on the Nokia 3230 prototype phone. Users will be able to use the phones to make payments in 2,500 outlets equipped with Visa Wave readers. Nokia's business development senior manager Risto Sipila expects such services to become more popular as, mobile phone users worldwide are likely to go up to 3 billion by 2008. It is because visa is using a specialized chip with the latest cryptography, security and smart card technologies which making the system extremely secure and forging difficult.

MobileExec currently provides premium rate SMS messaging across the all major Malaysian carriers. In the Malaysia, premium rate SMS and reverse billing services are regulated by Malaysian Communications and Multimedia Commission (MCMC). Such services are developing fast in the Europe and recently in Malaysia. It provides customers with admission or money off vouchers which can be unique coded or designed to allow viral spread. The mobile payment gateway service covers all mobile operators on Malaysia, with support for prepaid and postpaid service billings. Those packages include the following:

• Project Planning and Management Services


• Product Catalogue Submission (to all mobile operators)


• Premium Billing System Configuration


• Systems and Load Testing


• User Acceptance Testing (UAT) will all mobile networks


• Service Launch


• Monthly Service Monitoring and Progress Report


• Settlement Reports, collections from mobile operators
  

In short, the mobile payment system is easier, more cost-effective and more convenient for consumers, merchants and service-providers to execute and receive payments. Furthermore, mobile payment is safe and secure. It allows people to make payment at anytime from anywhere with just one SMS. It also allows people to receive money from anyone at anytime. As for merchants, business can be done anywhere such as conduct billing. There will be increased business opportunities for merchants as remote mobile payment can be done easily with the lower transaction and maintenance cost.

Electronic Currency

Electronic currency also called E-micro payment which is the digital equivalent of paper currency and coins which enables secure and anonymous purchase of low-priced items. It also refers to the money or scrip which is exchanged electronically. Normally, it involves use of computer networks, the internet and digital stored value systems. It also a collection term for financial cryptography and technologies enabling it.

Electronic currency has been widely used throughout the world on an institutional level for more than two decades. Today, nearly all of the deposit currencies in the world’s banking systems are handled electronically though a series of computer network.

E-micro payment systems include BitPass, Firstgate’s Click and Buy, PayLoadz, Paystone, Peppercoin, Beenz, Digicash and also Flooz. Thus, I’m choosing Peppercoin to be discussed.

Peppercoin is an innovative payment platform allowing consumers to use credit or debit cards for small transantions. Peppercoin’s systems are designed to be deployed as part of the banking and payment processing infrastructure. It is a small and micro payment processing solution that is highly compatible with existing payment products.

Peppercoin system was developed by Silvio Micali and also Ron Rivest. It was first presented on 2002 at RSA Conference. Peppercoin itself is not in the business of distributing content to users. It has developed the Peppercoin Small Payment Gateway a payment system that enables digital content distributors to sell content to users profitably at very low price.

Peppercoin solves the problem of the financial cost of transactions by dramatically reducing the cost of processing low-value transactions, thereby enabling new, financially sustainable, content distribution models, including those for the college and university marketplace.

Through a patent-pending process of cryptographically secure selection of digital payments, Peppercoin processing low-value transactions, reducing the volume of transactions that must be processed by a third-party payment processor or financial institution. Peppercoin states that their approach requires far less overhead than traditional transaction, based on RSA digital signatures to process and protect customer payment.