A survey of system platforms for mobile payment

Maryam Asadi Tehrani Department of computer

engineering Qom University

Tehran, Iran m.Asadi@qom.ac.ir

Ali Asghar Amidian Department of communication Faculty of Applied Science of Post and Communication

Tehran, Iran Aliamidian@ictfaculty.ir

Jafar Muhammadi Department of computer

engineering Sharif University of

technology Tehran, Iran

Muhammadi@ce.sharif.edu

HamidReza Rabiee Department of computer

engineering Sharif University of

technology Tehran, Iran

Rabiee@ce.sharif.edu

Abstract— with the evolution and significant growth in wireless technology and the development of mobile commerce, businesses can achieve superior performance through the implementation of platforms for mobile payment. However, there are several platforms for mobile payment to choose from which makes the selection of an appropriate platform for specific applications a challenging task. In response to this challenge, the most common mobile payment platforms recorded in the literature have been reviewed. This paper presents the result of this review describing the advantages and disadvantages of each system and offers ranking of the technologies considered. MCDM method is used for assessing and comparing different platforms from technical and business points of view. The results indicate that SIM-based application with binary SMS offers the best solution compared to other alternatives. Keywords- M-commerce, Mobile payment, Mobile service Platform, MCDM technique

I. INTRODUCTION After half a century from the conception of first

generation mobile phones, it is almost impossible to imagine life without them. Nowadays mobile services are widely accessible and are commonly used for private and business applications. There is strong competition amongst mobile service providers to attract new subscribers and to increase their market share.

Today there are different mobile services which are offered by companies around the world. The significant growth of these services highlights the importance of mobile payment. Mobile payment refers to any payment which is conducted on mobile devices such as mobile phones, PDAs and Tablets [15].

Designing a mobile payment system is a challenging task requiring consideration of several factors such as customer preferences, technological environment, social culture, legal and regulatory requirements and standardization. In addition to these factors, mobile payment involves multi stakeholders which need to be taken into consideration.

The acceptance of mobile payment system mostly depends on the platform on which payment relies. VISA defines mobile payment platform as any comprehensive suite of technology tools, security standard and business models which enable issuer and mobile operators to offer mobile services1.

1 http://www.visa.ca

The focus of this study is on mobile payment systems in accordance with their application platform. The relation between the components of platforms is described. The transaction flow, security issues and the roles involved in a platform are also discussed. In order to achieve credible results, expert opinion were sought which were then taken into account in ranking the platforms using MCDM method. The view points of two major stakeholders namely end user and service provider were considered in this study. Finally we have achieved a precedence sequence in choosing useful platform with respect to the circumstances.

In the proceeding sections of this paper a summary of related works conducted by various researchers is presented. In the subsequent section of the paper the characteristics of different platforms for implementing mobile payment systems are described. The paper then provides a comparison and ranking of various platforms from end user and payment service provider points of view by applying multi criteria decision making and ELECTRE methods. Finally precedence is achieved with respect to selection of suitable platforms based on prevailing circumstances

II. RELATED WORK Until now several studies have been undertaken on

mobile payment and related issues. Some of these studies propose a low cost and high scalability and security layered framework for mobile payment [1, 2]. Some researchers have worked on challenges facing service providers such as interoperability, security and infrastructure of the mobile payment system and propose architecture for micro-payments which addresses these issues [3]. Min et al. [4] discuss critical factors which affect on usability and satisfaction of the consumers from mobile services. Ondrus et al. [5] propose a multi actor multi-criteria framework to facilitate the assessment of mobile payments for the Swiss public transport industry. Meng et al. [6] discuss security requirements and solutions for mobile commerce and propose a mobile payment model based on WAP. Liu et al. [7] propose an innovative model for mobile payment which focuses on enhancement of privacy and non-repudiation. Sarajlic et al. [8] specified the most widespread access channels from mobile network operator’s view.

III. MOBILE PAYMENT PLATFORMS In this section eight distinct platforms which can be used

in designing mobile payment, have been described.These

2010 International Conference on Management of e-Commerce and e-Government

978-0-7695-4245-4 2010

U.S. Government Work Not Protected by U.S. Copyright

DOI 10.1109/ICMeCG.2010.83

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2010 International Conference on Management of e-Commerce and e-Government

978-0-7695-4245-4 2010

U.S. Government Work Not Protected by U.S. Copyright

DOI 10.1109/ICMeCG.2010.83

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2010 International Conference on Management of e-Commerce and e-Government

978-0-7695-4245-4 2010

U.S. Government Work Not Protected by U.S. Copyright

DOI 10.1109/ICMeCG.2010.83

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platforms include SMS, USSD, WAP/GPRS, phone-based application, SIM-based Application, dual chip phone, dual slot phone and SRCN2. Based on the communication channel in payment (SMS, USSD and WAP/GPRS), phone and SIM-based solutions can be divided in three platforms.

A. Pure SMS platform No special software has been used in this platform. The

communication channel between user and payment network is SMS. Here a standard format is used for sending messages such as timestamp, random number, from account, to account, amount, currency, and target mobile number. The payer authentication is based on payer mobile number and PIN. Because of security problem related to PIN a safer solution is achieved by one time password. Some of mobile services which can be provided by this platform include bill payment, financial operation like account history and funds transfer [10, 11]. These platforms have been shown in Fig.1.

Figure 1. The architecture of mobile payment platform based on SMS

B. USSD platform USSD is a capability of GSM network which can be used

for transferring information between mobile phone and application. User requests a service by entering short code on mobile. Format of code is standardized and content is specified for each service, the content can be containing USSD code, from account, to account, amount, currency, target mobile number. USSD gateway service provider communicates with GSM network through SS7 protocol. As shown in Fig.3, user sends a USSD request to USSD gateway. USSD gateway makes a session and route session information to suitable application. The application sends back this information to USSD gateway in XML form. USSD gateway makes USSD message and sends back to user. Bank interaction can be done by payment server with the banks involved. Some of mobile services which can be

2

short ranges communication network

provided by this platform include electronic content purchase and reservation (ticket, restaurant …) [8, 18].

Figure 2. The architecture of mobile payment platform based on USSD

C. WAP/GPRS platform In fact this is an alternative for payment through Internet

by using mobile phone. Authentication of the payer will be done by digital certificate, mobile phone number and PIN. An URL link in mobile phone download associated certificate. Transferring of information routed by GPRS network and WAP enabled phone. WAP uses a special language WML for communication Between WAP Gateway and content on the Internet. The WAP Gateway converts between WML and HTML, allowing delivery of WAP based content to a WAP capable mobile device [19, 20]. As shown in Fig.4 user sends the request through GPRS network, WAP gateway routed the request to content server. As mentioned in previous section, bank operation will be done by payment server with the banks involved. Some of mobile services which can be provided by this platform include financial operation and web store purchase [10, 11].

Figure 3. The architecture of mobile payment platform based on

WAP/GPRS

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D. Phone-based application platform In this platform, payment software installed on mobile

phone and payment operation will be done through this software. A communication channel (SMS, USSD and WAP) will be needed for transferring payment information onto mobile payment system. Depending on which channel is used, cost, security and accessible services will be different. J2ME or BREW is a tool for developing payment software according to GSM or CDMA network. The disadvantages of this platform include: applicability only on JAVA enabled phone, manual installation and update, duplicate installation in case of phone exchange and different versions required for various phones. Nonetheless, the advantages of using J2ME are end to end security, content encryption and improvement of network bandwidth usage[21,22]. Some of mobile services which can be provided by this platform include financial operation, electronic and physical good purchase, reservation (ticket, restaurant, etc). The architecture of this platform has been shown in Fig.4.

Figure 4. The architecture of mobile payment platform based on phone-based application

E. SIM-based application platform This platform is based on application installed on SIM.

User receives payment software and other services directly through OTA server. When the software is successfully installed, user can send a request for supported services onto operator. This request is processed in OTA server and recorded on transaction server. This platform enables user to encrypt the messages, OTA server decrypts the messages by HSM which include encryption keys. It should be noted that binary SMS used in this platform is different from normal SMS. Binary SMS allows the sending of rich content via text message in encrypted form and also it does not reside on the phone; it is just kept on SIM. Tool for developing this type of application is called SAT. SIM-application toolkit enables SIM to provide value-added services [23]. It consists of a set of instructions programmed in SIM which specify how to interact with outside of network. A special SIM-card called WIB-card is a suitable product for mobile operator wishing to deploy a wide variety of value-added services and

applications. 3 It has many useful features such as data security, speed enhancement and anti- conning mechanisms. STK menu with WIB-based programming can be updated speedily through OTA and SMS. A sample of this system is proposed by Rahimian et al.[14]. Some of mobile services which can be provided by this platform include financial operation, electronic and physical good purchase, reservation (ticket, restaurant, etc). The architecture of this platform has been shown in Fig.5.

Figure 5. The architecture of mobile payment platform based on SIM-

based application

F. Dual chip phone/ dual slot phone platform Some of phones have the ability to keep two chips, often

one of them is SIM-card and the other one is a payment card which permanently place in the phone. The Personalized information will be provided by the second card. EMPS is a joint product of three companies; VISA, Noreda bank and Nokia, in which payment is processed, is in this way 4 . Currently this project is in pilot phase. Some phones are equipped with second slot in order to initiate a payment. User should place the second card on the phone and start the transaction by entering related PIN number. Some of mobile services which can be provided by this platform include financial operation, electronic content purchase, reservation (ticket, restaurant ...). The architecture of this platform has been shown in Fig.6.

Figure 6. The architecture of mobile payment platform based on dual chip/

dual slot phone

3 www.gi-de.com/telecom 4 http://www.visaeurope.com/ press & media.

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G. Short range communication network platform In this platform purchase information can be sent through

short range communication network like Bluetooth, NFC technology and IRDA to the POS or vending machine and the user is charged with phone bill. This method of payment is suitable for micro payment and adopted with operator centric business model. Some mobile services which can be provided by this platform include electronic and physical good purchase and reservation. The architecture of this platform has been shown in Fig.7[17].

Figure 7. The architecture of mobile payment platform based on SRCN

IV. MCDM MODEL: MOBILE PAYMENT PLATFORM AND EVALUATION CRITERIA

Criteria from two perspectives; end user and payment service provider, have been used in ranking of mobile system platforms. The ranking has been carried out by applying MCDM model and ELECTRE method. MCDM model enables selection of best possible option from a number of feasible alternatives in the presence of multiple, usually conflicting criteria [9].

A. ELELCTRE method In ELETRE method, the evaluation criteria and

alternatives will be specified for a decision. The importance degree of each criterion has to be specified by obtaining expert opinion. For example in this study, MCCI5, the leader mobile network operator in Iran, and a number of banks have participated in determining these values.

In order to clarify how the results were obtained, we present a brief description of this method before applying it to collected data.

Assume that A, I, W represent respectively a set of feasible alternatives, evaluation criteria and weights of evaluation criteria [12].

The concordance index for two alternatives index h, k is defined as follow:

( , ) / ( )c h k w w w w , ;h k h k Where

5 Mobile Communication Company of Iran

jj iw w

jj iw w

jj iw w

The discordance index for two alternatives h, k is defined

as follow:

( , ) | (( ( ) ( )) / max ( ( ), ) |j j h j k j h jj iD h k g A g A g A

, ;h k h k Where ( )j hg A is the performance value for alternative

Ah in criterion j. j refers to the R-degree parameter used by a decision maker for criteria j to represent the degree of attention paid by the decision maker to criteria j. Both index values are then compared with the respective thresholds p , q to determine their significance.

( , ) ccon a b p a strongly prefer to b

( , )c cq con a b p a weakly prefer to b

( , ) ccon a b q a and b are indifferent

( , ) ddis a b p b strongly prefer to a ( , )d dq dis a b p b weakly prefer to a ( , ) ddis a b q a and b are indifferent

B. Evaluation criteria Selection of suitable platform for designing mobile

payment system depends on several factors. These factors may vary or at least they have different importance degree for user and provider. The criteria from user point of view are presented in Table.I. These criteria have been reported by other researchers in the literature [5, 16, 17].

TABLE I. USER CRITERIA IN MOBILE PAYMENT PALTFORMS COMPARISON

Criteria from payment service provider viewpoint are as

following: Security: this criterion represents the level of

security a provider should consider, security mechanism, encryption algorithm and the implementation issues [16, 17].

Cost: can be in form of fixed cost and variable cost related to transaction [13].

Technical acceptability cost security Ease of use

scalability initialization privacy Less operation performance transaction confidentially User Preferences

Remote access membership integration Easy

downloading and installation

comprehensiveness Non repudiation

flexibility

authentication

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Cultural and customization conditions: determining which platforms attract more users and hence more suited to a particular country .[proposed by authors]

Ease of implementation: impact of ease of implementation on system design [proposed by authors]

Global standards: impact of global standards on system implementation [17]

A summary of all criteria and alternatives considered are given in Table II and Table III.

TABLE II. USER AND SERVICE PROVIDER CRITERIA

TABLE III. ALTERNATIVES IN MOBILE PAYMENT IMPLEMENTATION

C. Data collection and comparison results For collecting data a questionnaire was prepared in order

to seek experts’ opinion regarding importance of each criterion and also the supportability of each platform in respect to these criterions.

Table IV shows the results obtained from sending out the questionnaire by applying ELECTRE method on gathered data, the concordance and discordance have been tabulated. The ranking of platforms has been determined by specifying

Suitable thresholds for concordance and discordance index. The ranking of platforms is given below:

A7>A1>A2>A9>A4>A8>A3>A6.A5>A11>A12>A10 The results show SIM-based application with binary

SMS is the best solution in comparison with others. It should be considered that the ranking is country specific and the results presented in this paper relate to Iran and hence may not be applicable elsewhere.

V. CONCOLUSION In this paper eight possible platforms for mobile payment

have been described. For each platform the architecture, involving roles, transaction flow and security has been determined. By using MCDM method and ELECTE technique we have compared the platforms according to evaluation criteria. The criteria have been considered from two viewpoints end user and service provider. The results show the importance degree of each criterion will be different according to the stakeholder involved. For instance, service providers are expected to view the criteria from different perspectives compared to end users having different priority. The results suggest that SIM-based application with binary SMS is the best solution for Iran.

For future research it is suggested to examine other criteria from different stakeholders’ viewpoints. Also other techniques in MCDM such as AHP, linear programming and etc should be used for comparison of platforms. Needed time for system development and SLA concept in proposing mobile service are remarkable problems for assessment of mobile payment systems which have been not considered in this paper. Obviously more general surveys need to be conducted on mobile payment platform to operationally test the platform in any given situation that would be difficult or even impossible task. . However, the preliminary study reported in this paper is considered to assist with future research.

ACKNOWLEDGMENT The work presented in this paper was supported by

Mobile Value Added Services Laboratory (VAS Lab) of Sharif University of Technology (SUT).

We would like to thank Mobile Communication Company of Iran (MCCI) for their assistance in this research.

criteria Ease of use C1 Security (end user) C2 Cost(end user) C3 Technical acceptability C4 Security (service provider) C5 Cost (service provider) C6 Cultural and customization condition C7 Ease of implementation C8 Global standard C9

Alternative SMS A1 USSD A2 WAP/GPRS A3 phone-based application with SMS A4 phone-based application with USSD A5 phone-based application with WAP/GPRS A6 SIM-based application with SMS A7 SIM-based application with USSD A8 SIM-based application with WAP/GPRS A9 Dual chip phone A10 Dual slot phone A11 SRCN A12

TABLE IV. QUESTIONATY RESULTS OBTAINED BY EXPERTS OPINIONS

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