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.

Credit Card debts: Causes and Prevention

Here is how to tell when you are too deep in credit card debt: if 15% or more of your monthly income goes to pay your credit card bills, you have triggered one of the many warning signs that your credit card debt is out of control. There are other triggers, too: paying the monthly payments on one credit card by taking out a cash advance on another credit card.

Credit cards give you protection for your purchases, allow you to shop on line, and provide a cushion in case of emergencies. However, people who overspend by using credit card have a hard time making ends meet and trouble saving for the future. The negative consequence of using credit card is that you will spend more if you use credit cards. When you pay cash, you can "feel" the money leaving you. But, this is not true with credit cards.

Credit cards are not free money. In fact, they are really high interest loans in disguise. Here is a breakdown of some typical credit card fees:

Finance charge: This is an interest charge (can be as high as 25 percent) on the unpaid portion of your bill each month.

Annual fee: Some companies charge yearly membership fees of anywhere from $20 to $100.

Cash advance fee: Avoid cash advances—fees are steep, and interest rates are usually higher.

Late payment fee: Paying late can also result in high interest rates.

Some of credit card holders pay only the minimum payment, practically guaranteeing a lifetime of debt if they do not change their credit card habits. So what is the solution?

Develop a budget: The first step toward taking control of your spending is to do a realistic assessment of how much money you take in and how much money you spend. Start by listing your income from all sources. Then, writing down all your expenses, even those that seem insignificant, is a helpful way to track your spending patterns, identify necessary expenses, and prioritize the rest.

Keep your credit limit low: A low credit limit will help you resist the urge to splurge. If you receive a congratulatory letter informing you your credit limit has been increased, you should call the credit card issuer and decline the offer. If the issuer would not do it, close the account.

It have been said that guns don't kill people; people kill people! In a similar vein, credit cards all by themselves do not get people into trouble. Personal finance is 80% behavior. Thus, you need to cut out habits that make you spend more.

The Application of Pre-paid Cash Card for Consumers

Pre-paid cash card is an electronic cards which has monetary value loaded into it and it is rechargeable. This electronic cards had improved our daily life become more convenient and we do not need pay extra charges for it. It is easily to be used, just tap the pre-paid cash card on the entry card reader.

Touch 'n Go

Example of the pre-paid cash card in Malaysia is the Touch ‘n Go card. It is an electronic purse that can be used at all highways in Malaysia such as the PLUS, major public transports in Klang Valley such as RapidKL , selected parking sites and theme park. It uses contactless smartcard technology and looks similar to a credit card. The consumers can use it widely around the Malaysia

Apart from that, user can continue using the card as long as it is pre-loaded with electronic cash. User can reload the card at toll plazas, train stations, Automated Teller Machines, Cash Deposit Machines, Petrol kiosks and at authorised third party outlets. It is very convenient to all the users in terms of saving their time from a long queue with an efficient speed of paying and do not require any cash on hand. Below is the Touch 'N Go Electronic Payment System (EPS) flow.

Click on the image to enlarge it.

For further information about the Touch ‘n Go card, click on the image below;

Octopus

In Hong Kong, the Octopus card which had been internationally recognised, is a contactless stored value smart card that can be rechargeable that used to transfer electronic payments through online or offline systems in Hong Kong. It is widely used for all the public transport in Hong Kong, on-street parking meters, car parks, and other point-of-sale applications such as service stations and vending machines. According to the Octopus Cards Limited, operator of the Octopus card system, there are more than 16 million cards which more than twice the population of Hong Kong. The cards are used by 95 percent of the population of Hong Kong aged 16 to 65, generating over 10 million daily transactions.

There are two main types of Octopus card which are the On-Loan and Sold; and two less common types which are the Airport Express Tourist and the Mass Transit Railway Airport Staff. On-Loan cards are issued for usage in day-to-day functions, primarily for fare payment in transport systems. They are further classified into Child, Adult, Elder, and Personalised categories, with the first three based on age and different amounts of fare concession. On-Loan cards are anonymous; no personal information, bank account, or credit card details are stored on the card and no identification is required for the purchase of these cards except Personalised cards.

For further information about the Octopus card, click on the image below;

EZ-link

Another example in the Singapore is the EZ-link card which link the ez-link card to the consumer’s credit card account. In addition, there is a multi-purpose machine for the consumers to carry out all the ez-link card transactions through the General Ticketing Machine (GTM) such as top up the value or check the balance of the ez-link card. It widely used in food and beverage such as McDonald’s restaurants; convenience store such as 7 Eleven; government services such as National Library Board; private bus services such as Metro Tours Singapore; shopping, retail and leisure.

For further information about the EZ-link card, click on the image below;