mcommerce in the UK


Another in the series of ‘Best of Mobile apps club’

Discussion started by Justin Pearse , Features Editor, New Media Age (NMA)[email protected]

Other contributors include:

Mr Ewan J. MacLeod CEO and co founder neoone

Paul Buckley : Managing consultant IBM

Steve Procter : CEO itagg

Nick Hancock : CEO callwise

Walter Adamson : CEO Digital investor

Ms Mary Anne Tolentino Asst. Vice President, President, Director

Bank of the Philippine Islands, Philippine

Mark Len: Alpheus solution

Jack Stevenson

Pauli Visuri : CEO Addwit

Louis Sequeira : 3D e-imaging

Tomi Ahonen : Tomi Ahonen consulting

Dr. Christian Mayaud : The verticomgroup

William Volk CEO Bonusmobile

Mobile commerce? [ justin pearse ] [ 15-Mar-05 5:01pm ] [ edit ]

Hi everyone,

I’m writing a piece looking at mobile commerce in the UK. With the EC having finally overturned their e-money ruling (that banned pre-pay users from using premium SMS to purchase anything that wasn’t consumed on the phone) premium SMS could be a perfect payment method from everything for online content to goods like CDs.

For instance, why couldn’t a newspaper, with every album review, add “text ‘U2′ and your address to have the album delivered, billed to your phone.”

Is mobile commerce like this going to take off?

I’d be very interested in hearing from anyone doing interesting work in this area.



very interesting .. [ Ajit Jaokar ] [ 15-Mar-05 9:29pm ] [ edit ]I hope to spark a debate on this topic. I think the industry would truly open up with we got the mcommerce right. Like Jerry Mc Guire says ..’Show me the money’!

Its sad that legialation is holding back what is otherwise a perfect cross industry mechanism.

Challenge [ Ewan J. MacLeod ] [ 15-Mar-05 10:24pm ] [ edit ]

The operators will need to reduce their cut first Justin.

More trust needed [ Paul Buckley ] [ 15-Mar-05 11:07pm ] [ edit ]there is an additional level of trust that needs to be earnt by the mobile operators before we will all switch to using our phones as a frequent payment vehicle for larger (£s vs p) transactions…if I bought that U2 album on my credit card, I trust that the correct amount will be billed to my account…I might try that on my phone today but I would check it each and every time right now.

Reminds me of the telcos becoming banks debate that raged a few years back…I trust my bank, they have never got a transaction wrong…telco billing errors are significantly more common (unfortunately).

I want to be able to trust my phone provider to the same extent I do my bank/credit card provider as a needed step before mass take-up of mobile payment solutions like this.

The Future is Greed [ Steve Procter ] [ 15-Mar-05 11:18pm ] [ edit ]Justin

At long last the EC have seen the light instead of acting like a bunch of bureaucratic idiots – of course it will take the FSA 23 years to ratify it, but we are close. However, the networks are still extremely greedy and as Ewan says, nowt will change until they re-work their greedy model.

Pay for newspapers!? – get real!!! Imagine if every time you went into the newsagent and handed over your 50p for a newspaper, a little oik from a bank jumped in between you and the shopkeeper, took your 50p, pocketed 30p and handed over the remaining 20p to the shopkeeper. Yeah that sounds like a great concept…not…

why is it that loan sharks are frowned upon for taking unreasonable percentages yet 6 of the biggest companies in this country get away with such out and out greed.

Why on earth do the networks think they can get away with this nonsense!? We are very very close now to having secure credit card payments on mobiles and the banks will dive in head first to support this. The mobile networks as payment takers will be crushed at that point and their premium sms will be something we all laugh about at parties in a few years time.

BTW, I find Virgin and 3, followed by Orange payout the lowest, what do other aggregators think? Lets compile a chart…



2-way sms for £99 per year

Steve Procter. Chief Executive. +44 (0)8712 777 111.

Greed II [ Steve Procter ] [ 15-Mar-05 11:22pm ] [ edit ]


Sorry, to answer your specific question, if the networks sort out their cut and get down to a few percent like the banks then yes, premium sms will become the killer app to kill all other apps dead…it will be majorly massive…in a very big way…..big…



2-way sms for £99 per year

Steve Procter. Chief Executive. +44 (0)8712 777 111.

A huge opportunity for the mobile operators but … [ Nick Hancock ] [ 15-Mar-05 11:24pm ] [ edit ]

My view is certainly that there is a huge opportunity for the mobile operators if they can get this right.If I could pay for goods, easily, securely, cheaply from my mobile why would I continue to carry around a wallet as well.

However … it does seem unlikely at the moment that the mobile operators are capable of achieving this because of the reasons Paul and Ewan have pointed out. My advice to the Operators would be

1) Sort out your billing systems or better, do a deal with a Bank to do it for you and

2) have the belief that a small percentage of a huge volume of transactions will be worth more than a huge percentage of a small number of transactions.


Check out the BT Callwise trial at for cheap international calls from your mobile

It’s easier to just swipe the phone [ Walter Adamson ] [ 16-Mar-05 3:16am ] [ edit ]

There’ll be opportunities for premium SMS of course and it will fill a niche but for items where you are physically present (e.g. buying a newspaper or at the convenience store) it will be far easier to just swipe the handset such as in Felica in Japan.

- Walter

yes, the operators forget that there are other options .. [ Ajit Jaokar ] [ 16-Mar-05 6:02am ] [ edit ]

consider the now almost ubiquitous oyster card.

It could very easily double up as a payment system. In fact, I would like it to. Its great and convient. I believe toronto has a system as well.

Assuming other things are okay(such as premium rate %), I see this as a huge opportunity.

I believe that operators will drop their cut(without which there will be no market as such)

Mobille apps are all about volume .. so I think operators will recognise that ultimately ..

However, with the EC regulation, the first hurdle seems to have been crossed.

See my new book at :

Mobile Banks [ Steve Procter ] [ 16-Mar-05 7:16am ] [ edit ]To become major payment providers, the networks need to:

- gain trust that they can look after every single penny of your money. Many would argue that the networks’ billing systems will not stand up to the sorts of transaction volume increases that would be seen if mcommerce really took off.

- offer payouts of up to 99% of the revenue. As everyone on here knows, that’s what you can get from accepting credit cards in ecommerce.

- improve the delivery reliability. Until last year delivery receipts on premium sms where not even widely available. Even now, not a high enough percentage of premium sms is delivered and charged sucessfully to the phone. This makes the model very difficult for some content providers as they might have already delivered the content. Delivery receipts need to become realtime (just like card payments) – the business wants to know if the recipient has been charged, not necessarily if he has received the sms on his phone – these two things must be seperated out; a major undertaking for the networks.

- improve payout terms. The networks hold on to premium revenues for around 1 month before paying out. This has to be much improved on if more and more businesses are to be able to take advantage of building mcommerce into their business strategy.

- convince their shareholders that this is what they should be doing rather than making their phone networks better and improving on customer satisfaction, retention and experience.

- go head to head with the traditional banks and credit card companies who will soon be appearing on a mobile phone near you.



2-way sms for £99 per year

Steve Procter. Chief Executive. +44 (0)8712 777 111.

G-Cash Mobile Commerce [ Mary Anne Tolentino ] [ 16-Mar-05 7:18am ] [ edit ]

The mobile commerce model in the Philippines launched by a major telco, G-cash seemed to be a good model for m-commerce. Previous to this its major competitor Smart Telecom, launched a few years back its card based m-commerce service (Smart Money). I don’t think it really helped grow mobile commerce. There were many obstacles in usage.

This time, I believe Globe struck the gold mine with its G cash – mcommerce via sms. It recently won in the recent GSM Association Awards in Cannes.

One can use gCash for payments, international and domestic money remittance. One can also cash in their gcash load in various merchant partners nationwide. They had to pass through our central bank for approval.

Philippine Ecademy Club

thanks Steve .. [ Ajit Jaokar ] [ 16-Mar-05 7:20am ] [ edit ]

know your views on this one!

gcash .. [ Ajit Jaokar ] [ 16-Mar-05 7:21am ] [ edit ]this is great maan. Good to hear from you, hope you are well. rgds Ajit

Alternatives to SMS [ Mark Len ] [ 16-Mar-05 9:13am ] [ edit ]The operators have taken steps to address many of the concerns raised above. Trust, slice of the pie etc seem to have been addressed through the formation by 5 of the large operators of Simpay.

In essence the operators or shops can provide the content/goods and if they are connected to the Simpay scheme then the payment for the goods can be made using your phone with the settlement done by the credit card company (or the phone company if you wish). All parties get a small slice of the pie with the shop getting the most of the price of the goods.

It does address one of the major criticisms of the operators, namely trust. I agree with Paul that the revenue assurance in the

mobile companies is nowhere near the level of financial institutions and this scheme should address that area. I for one hope that when launched it is a success as I never really trust the premium SMS market. It will mean operators adopting the “sell more for less of a cut” rather than the current approach.

On another note, the possibility of paying for goods via SMS can already be done in the Czech Republic amongst other countries. There are quite a few soft drink vending machines that accept SMS payment in Prague. SMS a number on the machine and a Coke pops out!



Why SMS when you can swipe [ Jack Stevenson ] [ 16-Mar-05 9:51am ] [ edit ]

As user not a provider, I think this would be great. If this was everywhere I would not need a wallet (where is your ID ?) I agree with Walter on the swipe idea. If I had a choice between swiping and having to type in an SMS message I know which I would prefer. I know it has been done and seems to be working in Japan, also the Oyster model seems to be working.

I have to agree with the comments about trusting the phone companies to handle separate financial transactions, but then I don’t think I would trust a bank to provide my mobile services. Perhaps some sort of agreement between them, maybe some sort of guarantee on the transactions from one of the ‘trusted’ (I use that word reservedly) banks.

Over all the sooner the better.


Note cost difference between small cash and bigger transactions [ Pauli Visuri ] [ 16-Mar-05 11:27am ] [ edit ]

Note that when considering the transaction cost (or the “cut” that operators take), one should keep in mind that small transactions are always much more expensive. While one may pay only a few % charge for card payments of £10 and up, cash handling is a completely differnt thing – there are costs with cashing, transporting, counting, bank charges etc – plus the cost of crime & fraud (and safety measures). Most proposed “electronic wallet” schemes have found that charges of up to 20% for transaction cost are well received for petty cash applications, especially where the whole sale is automatic such as in vending machines.

In Helsinki, Finland you can buy a tram ticket through SMS. The manual alternative, selling a £0.50 single paper ticket from a kiosk, must certainly have cost more than 50% of that ticket price!

it may not be as logical as that .. [ Ajit Jaokar ] [ 16-Mar-05 7:11pm ] [ edit ]i.e. in Korea .. I have seen SMS being used for payments. same with philipines and same with finland. Its like SMS itself .. probably not logical but still being used by people.

See my new book at :

what exactly was the EC ruling? [ Ajit Jaokar ] [ 16-Mar-05 7:12pm ] [ edit ]Is it all ‘go’ now for payment via SMS (from a legal standpoint)

ofcourse there are still the operators but .. from a legislative hurdle .. is the e-money bill as applicable for mobile efectively dead?

See my new book at :

Mobile phone companies as banks? [ Louis Sequeira ] [ 17-Mar-05 1:10am ] [ edit ]In the light of this discussion I think, an old article on Macalla’s site from 2003 should make interesting reading

Here is some info on the Czech operator Oskar’s set up on Axalto’s site



Footprints on the sands of time are not made by sitting down.

What with all the doom and gloom again.. :-) [ Tomi Ahonen ] [ 17-Mar-05 2:32am ] [ edit ]Hi gang, sorry was away in Berlin speaking at a CRM conference, so dropping into this thread rather late.

But come on, you all at the Mobile Apps Club should know better. Of course we can have m-commerce, there are too many success stories all around the world to ignore. You can pay for almost anything by mobile phone already. Its no longer limited to “micropayment” such as the vending machines (first introduced in Finland back in 1998, about the same time when the very first mobile VAS – Value Add Service ie downloadable ringing tone was launched also of course in Finland), from buying train tickets in Austria to ski tickets in Norway to airplane tickets in Japan to buying movie tickets in the USA to paying your speeding tickets in Abu Dhabi, etc etc etc. When all the world was looking at the introduction of the i-Pod and i-Tunes, quietly the Korean market introduced direct MP3 music file downloads to 2.5G and 3G phones, and for example Ricky Martin sold 100,000 songs in just a week all the way back in 2003.

M-Commerce is not a trivial thing either, totally the opposite. Here in London in less than a year 20% of all congestion charges were already paid by mobile (don’t have latest numbers, know it is much higher by now). When Robbie Williams performed in Vienna Austria, 20% of his tickets were sold by mobile phone. In Helsinki Finland already 40% of all single tickets sold to public transporation are paid by mobile phone. In Croatia half of all parking tickets are paid by mobile phone. In Japan a massive 84% of all mobile phone users already subscribe for some paid news content on their mobile phone.

Yes, the global music industry? Already 13% of the global music industry revenues are paid for by mobile phone. Don’t pooh-pooh the humble ringing tone; already today our British pop stars earn more from the ringing tone versions of their Top-of-the-pops hits than they earn from the sales of Single CDs. And following right in the footprints of music is the second huge global shift, the videogaming industry, where 5% of the global gaming software revenues come from games downloaded to – and paid for by – the mobile phone.

The stats are overwhelming, overpowering, indisputable, irrefutable. Compare to ANY previous innovation in payment mechanisms, including paper money, cheques, wire transfers, credit cards, debit cards – never before has ANY industry seen such rapid cannibalisation as those top numbers I listed – public transportation 40% in two years, parking 50% in three years, and paid news content in five years. The internet, a dramatically disruptive technology, did not achieve these incredibly fast rates of cannibalisation in any industry that the Internet has changed.

Don’t kid yourselves, m-Commerce is going to happen globally, everywhere, of course. I do agree with many of the side comments here, such as that we need mobile operators to be less greedy, although clearly the market is perfectly happy to live with the 10% – 90% split as the extremely healthy and robust m-Commerce markets in Japan and Korea attest. (We don’t need to go to 1% – 99%). European operators tend to be offering deals ranging from keeping 40% to keeping 20%, depending on which operator (smaller give better deals) and which market (more mature markets have better deals).

I had over 100 m-Commerce ideas in my first book Services for UMTS and another about 150 more m-Commerce ideas in my second book m-Profits. Essentially all of those have been deployed in some variant by now. I track mobile services and apps and list my favourite each month at my website – and have discussed over 500 of them at public conferences over the past five years – so Justin if you need some specific types of examples, let me know and will be happy to give you more ha-ha…

PS Incidentially, m-Commerce succeeds well when it is one of the Early Eight classes of services (see my third book ha-ha, but I have talked about the E8 about a year ago or so here at the Mobile Apps Club) and especially when the transaction happens several times per week.

PSPS the current edition of Vodafone’s customer magazine, Receiver, has my article on killer apps for 3G. It is the evolution on the series of articles I’ve written on what for the most part is m-Commerce, such as in the Financial Times last year, Telecommunications two years ago and in 3G Mobile three years ago. The Receiver article can be read for free at this site

Dominate !

Tomi Ahonen / HatRat :-)

welcome back Tomi! [ Ajit Jaokar ] [ 17-Mar-05 6:18am ] [ edit ]

Its time to Dominate!

In the US, We Just Don’t “Get it” At All … [ Christian Mayaud ] [ 17-Mar-05 6:41am ] [ edit ]I always respond with bewiderment when europeans (and chinese, koreans, and indians for that matter) talk about these huge opportunities with “cellphone based e-commerce” … the only example we have in the states of anything close is the whole “downloadable ring-tone” market … which looks completely insane to me … $2 for a 10 sec ringtone???

I think the “downloadable ring-tone market” is purely a phenomena of “someone else is footing the tab” (we have a similiar phenomena in US healthcare economics) … in this case, teenagers have no disincentive to not download the new ringtone since it is their parents who pay the phone bill anyway and may not even notice it … if the teenagers themselves had to pay the two dollars for the new tone, I suspect the market would be quite a bit smaller than it is …

yes, we do use alot of SMS (both teenagers, families, and yes, a growing amount of “intracompany” communications as well) but to think of SMS as an e-commerce platform?

You europeans are just “way out there” on the bleeding edge — we see no sign what-so-ever in the US market that “cellphone based ecommerce” is even a remote possibility …

Christian Mayaud | Managing Director | The Verticom Group

[email protected] | 914/239-3733 | Skype ID cmayaud

“Intelligence is like Four-Wheel Drive … It just gets you stuck in more remote places.” — Garrison Keilor

premium sms [ Steve Procter ] [ 17-Mar-05 6:42am ] [ edit ]


You are talking about the wider remit of commerce being done via mobile phones in general, not specifically premium rate sms – which is where this debate started. Correct me if I am wrong but paying your London congestion charge by mobile does not use premium rate sms, it is simply a mechanism to trigger your already registered credit card into being debited. Now don’t get me wrong, this kind of use of a mobile to trigger payments is indeed fantastic. Maybe we need more of that. But ultimately this is a credit card payment not a mobile transaction.

And if we are looking at all sorts of ways of using a mobile for commerce then lets not forget that the latest versions of both wap and j2me are secure. So seeing wap sites or java apps take credit card details is going to happen more and more. Indeed Vodafone themselves use cards over wap to get your card during their 18+ verification checks. Well they did on mine anyway; I hope they do some intelligent checking of the phone type to ensure they aren’t presenting a card screen on wap phones that are still unsecure, or that would be another very interesting story for Justin…..



2-way sms for £99 per year

Steve Procter. Chief Executive. +44 (0)8712 777 111.

Oyster, Smart, and the US market [ Walter Adamson ] [ 17-Mar-05 8:02am ] [ edit ]The Oyster card is the Felica Networks/Sony consortium. In Japan they have just moved up a notch and gone through the pain of integrating the card into the phone, which is painstakingly complicated, and testing readers that are 100% reliable and super fast when there are 100 commuters jamming behind you at the station.

The Smart Communications applications in the Philippines are huge models of SMS m-commece success.

The integrated Felica card in Japan, as operated by DoCoMo, has no transaction fee. That is, in plain english, DoCoMo takes no transaction fee. I don’t know why not, but probably as an incentive to get the new handsets and the systems very widely adopted.

And in the US, Christian, the games market is huge and growing and this is much more than ringtones. And my predictions about business applications bursting forth this year driven by the US also will mean an explosion of mobile commerce applications, starting in B2C and then in B2B.

But Tomi’s point is right. What are we all discussing here? This is all a reality?!

- Walter

Good points yet.. [ Tomi Ahonen ] [ 17-Mar-05 9:59am ] [ edit ]Hi Walter, Steve, Christian and Ajit

Good points Walter, Steve. Steve on the topic itself, you make a valid point, but I did understand that Justin was looking for such examples in a more general sense, he didn’t seem to limit it to premium SMS

On premium SMS, I think the perfect model – Christian you shuold especially look into this – is Habbo Hotel (also discussed here at the Mobile Apps Club) – where youngsters pay for small payment value content on the fixed Internet, through premium SMS on their personal cellphones. In Finland in the 12-16 age bracket, Habbo Hotel is about the most addictive legal thing you can peddle to kids this side of Crack Cocaine ha ha..

While on the subject, Christian, the CTIA just announced USA finally hit the 60% penetration level. This is the critical point when the “total” economically viable population in Western countries has a cellphone, meaning that true change in society can start to happen, and the transition goes from technology enthusiasts pushing the technology, to average people and businesses inventing hundredfold more uses all by themselves. Yes, a big step for you Americans, but remember Finland hit that milestone back in 1998. You are literally 7 years behind. So all what is now happening in USA, you can read from history books as having happened in Finland in 1998, in Sweden Norway and Italy in 1999, in Israel, Hong Kong, Singapore in 2000, etc. Yes, Ringing tones were literally the start of it all. Yet mobile interenet CONTENT revenues world wide are a 15 Billion dollar industry – many times that of the fixed Internet. And where 70% of the fixed internet incomes are from “questionable” services like adult entertainment and gambling, the 70% of cellphone content revenues are from music (ringtones), games and news.

Believe – ha-ha, and Dominate !

Tomi Ahonen / HatRat :-)

re: what exactly was the EC ruling [ justin pearse ] [ 17-Mar-05 10:01am ] [ edit ]

Re Ajit’s question on the EC ruling. In the UK this still needs to be interpreted by the FSA, which will publish a final guidance note on it, in the next few months hopefully. But Vodafone, for one, has already sent out letters to aggregaors giving the green light for services to launch. The rest are under pressure to follow

Habbo Hotel [ Steve Procter ] [ 18-Mar-05 7:23am ] [ edit ]Tomi

Please tell us how much a user in your Habbo Hotel example pays for an example service. Then please tell us how much of that money is received by Habbo Hotel and how much the operators keep?




2-way sms for £99 per year

Steve Procter. Chief Executive. +44 (0)8712 777 111.

Interesting Stat from the Walled Gardens talk at CTIA [ William Volk ] [ 19-Mar-05 7:14pm ] [ edit ]Completion of purchase on a web site (mobile content):

Credit Card: 5%

P-SMS: 35%

stats [ Steve Procter ] [ 20-Mar-05 2:48pm ] [ edit ]


Many web based businesses pay less than 2% bank charges. And with good house-keeping, security, etc chargebacks are not as high as many people like to think.

Yes, psms charges can be as good as 35% but worse case take this example…..on a 25p psms (which is actually 21p +vat) the payouts many aggregators give on some of the networks is down to around 7p…..which equates to a “bank charge” of 66%!!!



2-way sms for £99 per year

Steve Procter. Chief Executive. +44 (0)8712 777 111.

Sorry don’t have Habbo Hotel actual numbers [ Tomi Ahonen ] [ 21-Mar-05 10:05am ] [ edit ]Hi Steve

I don’t have the revenue-sharing numbers for Habbo in the public domain, so whatever I have, I can’t share.

But about the time when Habbo launched, the second largest Finnish mobile operator, Radionlinja (since renamed Elisa), was publically quoted that for a typical 1.50 Euro (=1 UKP) payment (including tax), the tax people keep 18%, the mobile operator keeps 27%, and the content owner gets 55%. If we remove the taxman, the revenue-sharing split was therefore 33% to the mobile operator, 67% to the content owner. I would guess that TeliaSonera (the biggest player) matches Elisa’s levels, and the smaller players (DNA, Saunalahti etc) will offer slightly better deals for content owners. Also I would expect that this level of revenue-sharing is still shifting, with gradually more going to the content owners.

Sorry, thats the best I have. What have you other Ecademists seen in your markets?


Tomi Ahonen / HatRat :-)

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  1. Ian Wood says:

    I think that you have to be careful with your development on a debate on M-Commerce. I have been working in this area for some time now and recent projects have seen me working with the Banks rather than the networks.
    The first issue is a simple question of just what is the business case? Conversations with some of Europe’s largest networks means that at present they are yet to have developed a reasoned business case just look at the fall of SIMPAY!
    The second issue is regulation if M-Commerce takes off just when does your Phone Company become a Bank? Can a Mobile Network work under the same rules as a retail bank in terms of liquidity?
    Perhaps you can have a better debate here rather than inside Ecademy and develop a better understanding of just what the future could be for e-money in the Mobile space.