A recently published patent is causing significant speculation that Google may be entering the mobile payment space with a simple system that utilizes SMS messages to effectuate mobile payment transactions. Coverage of the patent can be found at SEOptimize, as well as at Ars Technica. The full patent application is here.
Much of the coverage suggests this application might part of the build up to a ‘GPhone’. However, I’m skeptical. With the entry of everyone from Bank of America to Paypal into mobile banking, it seems only logical that someone at Google would seek to establish a presence in this emerging market. The claims in the patent application make little to no reference to an application - refering simply to SMS messaging - suggesting this patent application may be independent of any GPhone that Google may be contemplating.
In either case, Google’s work in the mobile payment space continues to validate the emergence of mobile payments as a potentially mainstream application. While I feel there may yet be identity and other security issues that must be addressed, such a system could significantly lower the overhead small business owners face in processing credit and debit card payments today.
There are about 3 billion mobile phone subscriptions active today, and just over 1 billion people connected to the internet. These figures alone should be enough to show that there is a good business case to extend payments to the mobile phone. In addition, many mobile phone payment systems in operation in Africa and Asia today do not require that you have a bank account, whereas most intenet based payment systems are hard to use in a meaningful way without a bank account. In many countries in Africa and Asia people have a mobile phone, but no bank account, and the phone with mobile payment options become the bank account. This is a very interesting market and I am surprised that not effort is spent in this area by PayPal for example. Whoever makes these payment systems universal has an interesting opportunity in front of them.
The question is what will the winning payment solution be in the end. It must be simple, fast, security (increasing with value) and able to support various payment options.
Smart Cards are said to be a viable mechanism to make it happen. Mobile phones grab the lime light. I think we end up with 4 cards each representing a measure of security that we can interface either through a 7816, 14443, magnetic stripe or ...
We can write what we want to these four cards the party that provides the trust (MasterCard/Visa, Government ... )