Mobile payment systems in Malaysia: its potentials and consumers’ adoption strategies.
Mobile payment (m-payment) is the collection of money from a consumer via a mobile device such as their mobile phone, Smartphone, Personal Digital Assistant (PDA) or other such device. Such device are playing an increasing and evolving in the wider development of electronic payment systems around the world. Mobile payment can be used to purchase any number of digital or hard goods, such as Music, videos, ringtones, games, wallpapers and other digital goods, Books, magazines, tickets and other hard goods.
Mobile network operators have played an important role in pushing the technology necessary for m-payment. In many cases, however, the early efforts to launch m-payment services were met by suspicion from financial institutions, including banks and card companies. Just a few year later, these stakeholders are now collaborating to trial a range of services including m-banking and m-wallet solution that store credit or debit card information on a SIM chip. Text messaging systems can also facilitate or enable payments.
Mobile network operators are approaching m-payments strategically, in their bid to retail customers and develop wider sources of revenue from lines of business which can be strongly complementary. Fixed-mobile convergence is one manifestation of this, as it gives telecom operators an opportunity to unify their payments platforms on an internet protocol basis and offer discount or loyalty points on m-payment as part of a bundled service.
In Malaysia, mobile payment systems are developing quite quickly but it market less organically. Emerging services have received government support, but uptake in the market has been limited. Existing services are focused predominantly on bill payment and m-banking, growing slowly into m-wallet services, remittance and top-up or transfer offerings.
Maxis and Maybank in Malaysia both provide a simple m-banking service for subscribers such
as bill payment, balance enquiries, and fund transfers. This can also be used to top-up Maxis accounts, download Maxis content, and pay for products such as pizza and movie tickets. Another Maxis competitor, Digi, is providing many of the same services to customers.Consumer’s adoption of mobile payment is important for widely using of it.
Simplicity and Usability
Simplicity and usability largely determine whether users will use a service. This includes not only a user-friendly interface, but also the whole range of goods and services one can purchase, the geographical availability of the service, and the level of risk the user is taking while using it. The learning curve should be close to zero and ease of use/convenience to the consumer should be enhanced. The customer should also have the ability to highly personalize the service in order to easily integrate it to his everyday payment activities.
Universality
M-commerce favors the logic of online universal payment services, integrating, in a user-transparent fashion, person-to-person (P2P), business-to-consumer (B2C), and business-to-business (B2B), domestic, regional, and global coverage, low-value and high-value payments.
Interoperability
In financial services, interoperability has always been a highly contentious topic, and its progress has been uneven and in many cases rather slow. Standardization around the payment service should make interconnection of networks and systems technically easy and cost-effective. Mobile payment component development should be based on standards and open technologies that will allow any system to interact with another system on a global scale at all levels (e.g. any mobile with any POS, any payment software should run on a wide range of mobiles etc.). The number of acceptance points is critical; therefore, standardized solutions that can be composed of plug-and-play components are a must.
Security, Trust, and Privacy
Upon subscribing to an m-payment system, users are expected to place inherent trust in the system. Giving access to a checking or savings account to a software company is not the same thing, in most users’ minds, as giving that same access to an already trusted entity, such as a bank. Unless the basis for electronic payment systems is based on tried and true secure banking practices, it is unlikely that users will adopt it. Needless to say, all steps should be secured and trusted from a technological as well as social perspective. Furthermore, m-payment should minimize fraud losses and provide user-controlled transaction-specific privacy support. The last implies that anonymous payments should be possible (as with cash today). Furthermore, technologies such as biometrics, and mobile digital signatures will have to be further advanced in order to be easily integrated into MP architectures.
Cross-Border Payments
For an m-payment service to be widely acceptable, it should be possible to make cross-border payments almost as easily as local payments. Furthermore, this should be done regardless of the location of the user (i.e. whether he is roaming abroad or not). The European Union requires a cross-border electronic payment system to be available in all of its members, and to be as efficient as any domestic system. Any global MP system should be able to handle cross-border payments in any currency and at any place.
Cost
The new systems should be, in the end, more cost effective than the legacy approaches, e.g. the technology used may cost more but fraud is minimized, so ultimately it is a cost-saving solution. They should also create new revenue flows or better handle existing processes in order to justify their existence.
Local Market Understanding
Most customers are used to existing payment methods and need an incentive to use anything new. The ability to use the mobile device as a payment tool in itself might not be enough. Users and merchants need to see additional benefits. Approaches that wish to be sustainable must either improve their functionality and usability, or be creative in making users and merchants perceive it as beneficial. Furthermore, the same success criteria may not apply to every country due to local social conditions. The last factor leads to the requirement for an understanding of the local market, as well as an understanding of unique conditions on a per region or even per country basis.
Integration of Legacy Approaches
It should be possible to reuse existing infrastructure and legacy billing systems, especially those that are difficult to change (e.g. bank systems). Existing channels, such as pre-/post-accounts, credit card infrastructures, etc., should be supported, and the user should be free to choose the processing partner (e.g. bank, MNO, credit card) on a per transaction basis (corresponding to the requirements of each processing partner).