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Nokia Launches Pay-By-Phone Service

Posted by samzenpus on from the easy-financing dept.

adeelarshad82 writes "The world's top mobile phone maker, Nokia, said it would launch a mobile financial service next year targeting consumers, mainly in emerging markets, with a phone but no banking account. Nokia's Money service was based on the mobile payment platform of Obopay, a privately-owned firm that Nokia invested in earlier this year, and it is now building up a network of agents. Obopay, which uses text messaging and mobile Internet access, charges users a fee to send money or to top up their accounts."

34 comments

  1. O2 just started doing this in the UK by duguk · · Score: 4, Informative

    Oh you mean in a similar way that O2 (a UK mobile company) started doing in the UK recently with their Cash Manager card?

    O2 Cash Manager - "You load money onto the card, (using your phone or other methods) then whenever you use it you'll receive a free real time text alert. This will tell how much money you've loaded, spent or withdrawn, and how much you've got left. Simple."

    1. Re:O2 just started doing this in the UK by stoolpigeon · · Score: 4, Interesting

      It's been going on in Africa for quite a while. It sounds like they are just investing more in owning the full process so they can make more profit from what is already going on and will surely be growing. The cell phone companies in much of Africa have essentially become the banks for many people, and of course the vast majority of phones you will find there are Nokia phones.
       
      I was in a meeting last friday with a guy from a communications lab at the University of Central Florida. He is working on distance learning with smart phones. I think we may be doing a test study with them in Kenya next year. We were primarily focused on the education software part of it, but much of the discussion also dealt with microloans and transferring of funds via this method. We would like what we do to be self sustaining. It's really some very exciting stuff I think, but I may be a bit biased.
       
      Not directly related to the article - but they are using Android as their primary platform. I'm stoked about that too because I think Android is going to be huge down the road.

      --
      It's hard to believe that's how Micronians are made. Why don't we see it right now by having you both kiss one another?
    2. Re:O2 just started doing this in the UK by gravyface · · Score: 2, Insightful

      I can see this working in a modernized market like the UK (see, "those with accounts"), but how does this help those in emerging countries with no bank accounts? Credit cards? Don't you need an account for a legitimate credit card? It's been so long since I've had mine, I can't remember. Seriously, I'm not "getting" how they plan on converting analog currency into a digital transaction with the phone and nothing else.

      --
      body massage!
    3. Re:O2 just started doing this in the UK by stoolpigeon · · Score: 3, Informative

      A person has a phone - they pay for minutes on the sim card. Those minutes have some value. That value can be transferred to another phone. People move money around and the phone company is essentially their bank. There are also endpoints where cash can be had, but in many places this isn't necessary as the money just moves around between phones.

      --
      It's hard to believe that's how Micronians are made. Why don't we see it right now by having you both kiss one another?
    4. Re:O2 just started doing this in the UK by jaiyen · · Score: 4, Informative

      Here in Thailand, a similar system works by phone users purchasing top-up cards at 7-11's, supermarkets or general stores. Once you've got the credit on your phone, you can make a payment by sending a specially formatted text message. The stores selling top-up cards are everywhere, and no credit cards or bank accounts are needed.

    5. Re:O2 just started doing this in the UK by 117 · · Score: 1

      This appears to be nothing like the Nokia service from TFA. All this is is a pre-pay credit card (of which there have been many available in the UK for a while now), which is only available to O2 customers and has the added function that they send you a text message when your balance changes. It does not let you pay for your stuff with your mobile, and it does not let you top it up using your mobile phone (although you can top it up at O2 shops and mobile phone 'Pay Points').

  2. This has been around since the 70s by Anonymous Coward · · Score: 0

    Remember those 1-900 porn numbers? Those were the days.

  3. GSM Security? by William+Robinson · · Score: 3, Interesting

    Last time we were trying to push USSD based 'small payment system' in GSM networks, the Central Bank (of that country) launched an independent study which found that security practices in GSM networks were below standards to permit financial transactions. Cloning and some weaknesses in A3, A5 and A8 (and other algorithms/mechanisms) played major concerns.

    TFA does not mention anything about security, but, I was wondering how exactly they would take care of this.

    --
    hilarious
    1. Re:GSM Security? by gsgriffin · · Score: 0, Offtopic

      Spoken like someone who has never actually touched one of the 4 billion people on our planet that have no bank account, credit card, or anything other than a cell phone and cash. You can travel in a lot of the world and find no land phones or banks, but a cell phone tower and everyone with a cheap phones. Developing this technology helps most of the world, but may not impact you at all. You're in the minority of people who may not benefit from this.

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      jsut athnoer menagiensls ltitle psrhae for you to dcoede. Why do we wtsae our tmie dnoig tihs?
    2. Re:GSM Security? by Anonymous Coward · · Score: 0

      He asked about security not necessity, point the flamethrower somewhere else...

  4. hurry up by Anonymous Coward · · Score: 0

    they should hurry up implementing this, before someone else does...
    the amount of money to be made here is enormous

  5. Money laundering by Anonymous Coward · · Score: 0

    Won't this fall foul of money laundering regulations?

  6. Where is the need for a mobile phone? by millwall · · Score: 1

    Where is the need for a mobile phone? Why can't this be done with just a credit card and an RFID chip instead like the Barclaycard OnePulse. Investing in infrastructure for this kind of card would make a hell of a lot of more sense to me.

    1. Re:Where is the need for a mobile phone? by natehoy · · Score: 2, Informative

      Need? Who said anything about need? Look at the title again - "Nokia is launching..."

      This is being launched on a phone because it's being launched by a company that makes phones.

      Sure, this could all be done with a credit card and an RFID chip, but then Nokia wouldn't be launching it, would they? :)

      Nokia wants your phone to be your phone, your Internet connection and email client, your camera, and now your wallet. The more functions they can put on a phone and have them generally accepted, the more people will need to carry them, and if this payment system is exclusive to Nokia phones you're more likely to buy one.

      --
      "This post contains words, known to the State of California to cause thought. Wash brain thoroughly after reading."
    2. Re:Where is the need for a mobile phone? by prayag · · Score: 1

      Why can't this be done with just a credit card and an RFID chip instead like the Barclaycard OnePulse.

      Credit cards to people having no bank accounts ?

    3. Re:Where is the need for a mobile phone? by drinkypoo · · Score: 1

      People already have and use cellphones. Go to Peru and you'll find people riding donkeys and talking on cellphones. Expecting people to carry an additional piece of plastic is stupid. We wouldn't even have land lines any more (hardly) in this country if it were smaller, because most of us have cellphones too, but we have hills and trees and therefore problems covering large areas.

      --
      "You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
    4. Re:Where is the need for a mobile phone? by Tellarin · · Score: 1

      It's simple, they use a phone as people already have a phone, there is no need for new infrastructure, and because people using the system don't have a bank account (let alone a credit card).
      This is not even a brand new idea by Nokia. Lots of operators are doing similar things.

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      -- SouNerd.com
    5. Re:Where is the need for a mobile phone? by Chibinium · · Score: 1

      Where is the need for a mobile phone? Why can't this be done with just a credit card and an RFID chip instead like the Barclaycard OnePulse. Investing in infrastructure for this kind of card would make a hell of a lot of more sense to me.

      Credit cards aren't necessities; cellphones are beginning to be, as they link rural merchants with their market and the rest of the world. Developing countries also prefer cell towers over phone lines for cost issues. They're basically skipping over a century of prototyping. With that said, hitchhiking one extra function onto a guaranteed platform would seem logical enough.

    6. Re:Where is the need for a mobile phone? by Zerth · · Score: 1

      That'd require an additional item that is useless except for its cash value. Cell minutes have use by themselves. In countries where only a few people in an area have cells, this allows them to offer communications services and act as ATMs.

      They sell use of the cell for cash, but you can also buy them minutes to send to another "cell operator", who will then pay out in another village from their stash from selling use of their cell. Tadah, low-resource wire transfer.

  7. In other news... by Anonymous Coward · · Score: 0

    Nokia n900 specs revealed: http://maemo.nokia.com/n900/

  8. This is good news for helping people by gsgriffin · · Score: 1

    If any of you have lived in countries that are less developed, you will notice that most people will have a cell phone, but not a bank account, credit card or anything other than cash. The good news about these types of services is that they are begining to provide the majority of the world with the opportunity to have money "on account" and can actually be used more and more like a credit card. If you need something or want to buy something from someone, you can transfer money from your account to someone else. I saw this happening already in countries like Botswana, believe it or not! Applaud the development of technology that may have very little impact on you but could stand to help billions of people in the world.

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    jsut athnoer menagiensls ltitle psrhae for you to dcoede. Why do we wtsae our tmie dnoig tihs?
  9. preinstalled TLS/SSL certificates by S3D · · Score: 2, Informative

    security practices in GSM networks were below standards

    If proper certificates preinstalled on the phone and bank server by phone manufacturer, public key crypto shouldn't be vulnerable to man in the middle, and insecurity of GSM wouldn't matter. Nokia is exactly in position to do it.

    1. Re:preinstalled TLS/SSL certificates by grcumb · · Score: 1

      security practices in GSM networks were below standards

      If proper certificates preinstalled on the phone and bank server by phone manufacturer, public key crypto shouldn't be vulnerable to man in the middle, and insecurity of GSM wouldn't matter. Nokia is exactly in position to do it.

      What bank?

      There's no need for a bank at all. Transactions can be done purely using phone credit because, like cash, it retains its value. 5 bucks worth of credit is still worth 5 bucks after you've transferred it. Most mobile network carriers in the developing world have this capability already. It's extremely popular, especially in areas where crime is a problem. Lose your phone? It's a problem, but you can still call the phone company and cancel your account before anyone spends the credit you had stored in it.

      Likewise, in nations where travel is difficult, dangerous or expensive, people can pay for things via mobile credit. expediting trade in economically depressed areas.

      Phone credit as cash is a brilliant innovation that was discovered by consumers. The fact that Nokia has discovered its usefulness is a sign of their responsiveness, but I'll wait to see just how truly innovative it is.

      --
      Crumb's Corollary: Never bring a knife to a bun fight.
    2. Re:preinstalled TLS/SSL certificates by Anonymous Coward · · Score: 0

      and what to do with all the pre-existing phones. how do you make that ubiquitous? how much money do you lose by not including phones that dont even have key rings, old nokias and the like lol, think harder

  10. GSM Security? There isn't any. by SgtChaireBourne · · Score: 2, Interesting

    GSM only authenticates one way, not both, so it is almost ideal setup for man in the middle attacks. One of the presentations at last year's CCC, the 25C3 covered this, but you can find plenty of older and newer material on it elsewhere.

    Any GSM phone-based payment system has some big challenges. GPRS could be better, since you can then run something behind SSL or SSH. However, even then, when it comes to money, the designers must design the system on the assumption that the network is insecure, perhaps even the endpoints.

    --
    Beta is broken and the link to classic doesn't work. Stop wasting our time or there won't be anybody left here.
  11. Won't see it in the US. by MaWeiTao · · Score: 1

    I thought it was already quite common to pay for things via a mobile phone in Europe and Asia. The transactions and billing show up on the phone statement. My company has a client who was interested in this sort of thing for their service and instead had to go with a clumsy workaround. Apparently credit card companies and banks have lobbied quite hard to keep anyone else from encroaching on their business.

    So I'm curious to see if Nokia's service will ever see the light of day in the US. American financial institutions are so in bed with the government that they're basically protected from the need to actually be competitive.

  12. Compete with free by BurtCrep · · Score: 1

    I suppose the trend is unstoppable by now as we all jumped right into it with our credit and debit cards. Still, I'm always amazed that people willingly pay to pay, that is, give a fraction of the transaction to some third party, just for allowing the transaction to take place. In the good old days of cash, the passing of money from one hand to another was free. Now it appears that every time I need to pay for something, I need to pay a little more. Is that really acceptable? Am I the only one who's not too excited by this?

    1. Re:Compete with free by tlhIngan · · Score: 1

      I suppose the trend is unstoppable by now as we all jumped right into it with our credit and debit cards. Still, I'm always amazed that people willingly pay to pay, that is, give a fraction of the transaction to some third party, just for allowing the transaction to take place. In the good old days of cash, the passing of money from one hand to another was free. Now it appears that every time I need to pay for something, I need to pay a little more. Is that really acceptable? Am I the only one who's not too excited by this?

      If it's between two people, cash handling is cheap. If it's for a small business (think corner store), handling cash is likewise cheap. But get bigger, say the Target/Best Buy/Wal-Marts of the world, and cash handling suddenly gets very expensive.

      But first, about cash and two people - lots of people don't want to carry large amounts of cash. If you're buying something for $500, and you've got to meet someone at an unknown location, do you really want to carry $500 in easily-stealable cash, or would you rather have it billed to you later, possibly with legal protections and paper trails? After all, there's many a story about (probably dumb) sellers/buyers getting robbed of their merchandise/cash. That, and who really wants to carry more cash than they can afford to lose that instant on the street (muggings, pickpockets, etc)? Credit, and to a limited extent, debit cards help avoid the issue, somewhat. Debit cards being preferred since money can be withdrawn easily and someone can be forced to give up their PIN. (Why banks don't allow for a "distress" PIN, I don't know).

      Back to the cost of handling cash - yes, handling cash is expensive. Any retail flunky can do the steps needed for a credit/debit transaction - the computer spits a number out, number is punched into machine (or computer can do that, too!), card is swiped or read (chip cards), and a piece of paper comes out signalling payment success or failure. For credit, one piece has signature (or with pin, store copy) which is slid into the drawer and another copy given to customer with receipt. Computer keeps track of everything.

      Cashiers though, have it much tougher. At the retail level, the company has to trust you (or have big surveillance cameras similar to casinos), which automatically costs money - doing retail cash transactions means you probably earn a little more money than minimum wage to reduce temptation and the possibiliy of getting jumped from the back room to the cash register. Next, a whole lot of book-keeping goes on. A cashier has to "sign out" their cash trays, which have a specific amount of money in them (bills, coins, coin rolls). A smart cashier would count the money to ensure it's correct. Then they log into the register and enter in the starting cash amount. Finally, transactions are done.

      At the end of the shift, they close out the register, and the register prints out the amount of cash the tray should have. The cashier then has to take the tray back, and count the cash in it to ensure they match. Often, they don't by a few dollars (happens - usually through wrong change), and the discrepancy noted. If it's big enough, then something has to happen, usually more training for the cashiers because of it. It's also why cashiers "make change" with each other - giving a $10 note to exchange for a $10 coin roll, for example, or breaking a 50 for 5 10s. The register doesn't care about the actually bills, just the totals. And bad things can happen when you're up short.

      And then, at the end of the day, the money has to be deposited at the bank. If it's a particularly big day of takings or if there's a large amount of money at the end of the day ($100K+ isn't unusual for big box stores), then the armoured cars are brought in, which also cost a bit of money, to transport the cash to the bank. For your local corner store which may have a few thousand dollars per day, they use wallets and the depository slot.

      Handling cash isn't "free" - it's very cheap

  13. Virgin Mobile... by Xin+Jing · · Score: 1

    I've been doing pay as you go for the past 8 months with Virgin Mobile which uses the Sprint network. It's been convenient to top up since I get the topup cards at Wal Mart while I'm shopping for my weekly goods. I buy a $20/200 minute card and could get better /minute rates if I did a minute pack and paid more for each topup. All in all it's a good setup, although there are a couple of times where my remaining minutes were exhausted before I could topup and had to go get a card to call back, which was mildly embarrassing due to poor planning on my part.

  14. heard this service since 2004 by CALI-BANG · · Score: 2, Informative

    .. here in Philippines.

    I believed this service is far more successful in third world country. In some place there's no paypal or even
    the concept of wire transfer is quite alien to them. it's easier to send money through sms than going to the
    bank and depositing money to someone's account.

  15. Its not easy by Anonymous Coward · · Score: 0

    SMS is ubiquitous you have a phone you have SMS facilities.
    Some assumptions being made on this thread are somewhat incorrect.
    If you wish to launch a money transfer service in a country youll have to be vetted by the regulatory bodies in question.
    Transferring and using phone credits as money would extend the reach of the phone credit facility into financial regulatory models. This doesnt happen.
    For money transfer systems a separate account is required.
    You are competing with and taking business from banks, you need a network of agents who will accept your virtual money, you need to ensure those agents are trustworthy and that yours and your customers money is safe, you need to ensure that the technology is fraud proof, corruption proof, and available.
    This is no minor undertaking and very few implementations have succeeeded outside of safaricom's mpesa.
    The technology is relatively simple actually, its everything else around it that makes it hard to succeed in this emerging industry.