In what looks like the first major blurring between telecommunications companies, credit card networks and banks, a conglomerate of cellphone networks in the United Kingdom and Europe is launching a system that may challenge credit cards as a way of paying for things, online and off.
Simpay is launching a system that will allow customers to charge things directly to their cellphone bill. That’s not a new thing but, just as with Visa or MasterCard, with Simpay it will not matter who your bill is from, who the merchant is and who you are connecting through.
The Simpay network will create an international payment system specifically designed for charging things to your phone bill, whether the items are bought online from your phone, on the internet or in a shop.
Cellphone users in many parts of the world, including South Africa, have been able to buy things or enter competitions via their handset for a while. In some parts of the world, customers can use their credit cards, buy prepaid credits, or charge things from their bank account via their phones in a variety of ways, but none of these systems can talk to each other.
This means customers can only buy from merchants who are signed up to the same payment system as they are — the merchants and the cellphone companies have to go through the expensive business of finding each other and joining up their systems before they can start to look for clients.
Roaming customers are in trouble too: each cellphone network has to negotiate with another to support each others’ payment system. In the worst cases, with every country having three or more networks, the number of deals that need to be done for one company to be able to sell to potential customers is prohibitive.
Simpay will solve all this. As with credit card networks, the merchant only needs to have an account with one of the connected networks. The networks connected to Simpay will be able to buy things from them and charge the cost to their cellphone bills.
The credit card network analogy is not stretching a point. A Simpay-subscribing cellphone network allows customers to buy things across borders with money drawn on credit from their billing agreements — it is close to being a credit card system.
Because Simpay is international and designed to deal with users and merchants on different networks, or in different countries, it also deals with one of the main differences between the internet and cellphones.
Currently, access to content is controlled by each cellphone network. Simpay, however, creates a payment system that allows content providers to deal with just the one network for access to payments from every Simpay participant.
This makes things easier for everyone, but also changes the balance of power within the cellphone world to something that more resembles the internet, where the sites you visit needn’t have a connection with your service provider.
This is all just in time. M-commerce is again tipped by analysts to be the next big thing.
One analyst says that last year there were 3,5-million m-commerce users in Europe where, by 2007, 27-million people will be using their cellphones to spend money.
Simpay thinks they ”will bring more than £1-billion of extra industry transactions by 2007”. The question of what this will be spent on will have to wait but, in the meantime, the networks are scrambling in preparation.
From early next year, when Simpay launches, the public will get to say if it was all worth it. — Â