Brown CS Prof. part of cell phone payment plan

Trial scheduled for spring, mobile phone payments touted to offer greater security and lower commission rates

Ocean State Partners, a startup company run in part by [Adjunct Professor of Computer Science Donald] Stanford, is looking to introduce mPay - a free system that allows customers to use their cell phones like debit cards - to campus in time for the fall semester...

...With mPay, a customer can send money instantly to anyone else with an mPay account - a friend, a business, a taxi driver or even a vending machine. The service requires no extra software or text messaging and works on any cell phone - even, Stanford said, a seven-year-old phone he bought on eBay...

...Stanford stressed the security of the system. No information is stored on the cell phone, so no one else can access the money if the phone is lost or stolen. "Credit cards are very insecure," Stanford said. "Anyone can pick up a credit card and start signing. It happens every day."...

...Ocean State Partners plans to offer mPay to Rhode Island college students before opening the service up to all of Rhode Island. The company is currently negotiating with Brown, the Rhode Island School of Design, and Johnson and Wales and Bryant universities. Eventually, the plan is to make mPay national.

Full Story: Pay as you text? mPay hopes to make cell phones the new credit cards Source: Brown Daily Herald, December 5th, 2007 Added on December 5th, 2007 at 9:12 am, by Judy He

4 comments

Comments

matt.gillooly

Submitted on December 5th, 2007 - 5:18pm link

Interesting... If I recall correctly, this was a model that PayPal tried and discarded. I'd be really interested to hear Lee Hower's thoughts on mPay.

Also, with regards to credit cards' insecurities, there was a great interview with security guru Bruce Schneier in the Freakonomics Blog today, in which he distinguishes between securing one's identity versus securing individual transactions. Apparently, protecting primarily against identity fraud is too difficult a problem, so CC companies spend a lot of time validating individual transactions behind the scenes, and all things considered, it seems to be working fairly well for them.

leehower

Submitted on December 6th, 2007 - 3:52pm link

I've met one of the co-founders of mPay (Mirek Kula) and am in the process of learning more about the company. So I can't comment directly on their approach at this stage, but they have a solid team and I'm certainly curious to learn more.

We did indeed work on various payment mechanisms on mobile phones and PDAs at PayPal, and in fact my first job there was as Product Mgr for our wireless tools. In the early days of PayPal we had products based on IR transfer (mostly for PDAs), then later WAP-based phones, and then after the company became part of eBay (and after my involvement) they developed some payment mechanisms using SMS short codes.

While I'm pretty proud of what we achieved technically (we had one of the first secure WAP applications using WTLS, the mobile equivalent of SSL), the market reality is that mobile payments haven't taken off dramatically in the US for PayPal or anyone. We have a fairly robust payment card infrastructure here (credit cards, PIN-based debit, prepaid/gift, etc) that's been harder to displace, though in places where this isn't the case mobile payments have fared much better (e.g. Philippines - heavy use of SIM cards as stored value).

Probably the biggest challenge w/ any new payments system is gaining critical mass of both buyers (payers) and sellers (merchants). It's a classic chicken and egg problem... few buyers want to adopt a form of payment that isn't widely accepted and similarly merchants are resistant to additing another payment option if few consumers actually use it.

JudyHe

Submitted on December 6th, 2007 - 4:36pm link

Matt's comment reminded me of this article on research out of Brown from a few months ago; they talk about it as identity verification without the identity part. http://rinexus.com/news/866/br...

As for mPay, I'm still on the "mobile phones are for phoning people while mobile only" bandwagon but sometimes I think that wagon is headed to Ludditetown...

matt.gillooly

Submitted on December 6th, 2007 - 5:37pm link

Thanks much, Lee. I wonder if starting with a narrower model like buyyourfriendadrink.com is the way to help an SMS payment system get a certain amount of traction among consumers, before widening the net to all types of merchants.

Thanks for the link, Judy. Anna was actually my concentration advisor... very cool to hear about her award.