Vodafone extends micro-payment service

Vodafone UK has launched a new mobile-commerce service aimed at speeding up the payment for goods over the internet or via Wap phones with established credit and debit cards.

Following on from its m-pay bill service, the mobile phone operator wants to lure customers to its m-pay micro-payment service with the promise of a once-only registration process for customers' card details.

M-pay bill, which launched last February, only caters for transactions between 5p and £5 and does not rely on debit or credit cards as users receive a bill from Vodafone.

Limits for m-pay cards are set by the credit or debit card companies which bill users.

Jim Wadsworth, head of m-commerce at Vodafone UK, said: "We had a strategic need to open up micro mobile payments with m-pay bill. The m-pay card service completes the family.

"M-pay cards sit in front of the existing credit card infrastructure, but make it easier for the user. Making a purchase via Wap, for example, can take up to 60 key depressions. M-pay cards reduce that to six.

"From a merchant's point of view this is good news as one quarter to one third of all online transactions are ditched because of the amount of data that must be entered."

Card details, held by Vodafone in a secure central register, are automatically transferred to the online merchant when required.

To complete a transaction with participating traders, customers enter their user name and password as opposed to entering their full details as required by credit and debit card transactions.

Companies including Odeon Cinemas, CD-Wow, Blushing Buyer, Friends Reunited and Just Champagne have already signed up for the service.

As an added security measure, a unique one-time password will be sent to the customer's mobile phone via SMS, which must be entered into the site to authorise the transaction. Users will be charged separately for the text message.

Wadsworth claimed that users will be reassured by Vodafone's brand name. "It lends trust but, at the harder end, we have introduced the password that must be bashed back into the website," he explained.

"For consumers nervous about transacting online it gives them extra confidence."

Martha Bennett, vice president at analyst Giga, said: "There is a trust issue, but Vodafone is a brand name and consumers are probably willing to pay for the extra confidence of an SMS password."

But she indicated that it is difficult to speculate on the degree of success for the service as Vodafone has refused to reveal user numbers for its mobile-commerce services.

Wadsworth declined to say how many are using m-pay bill. "We can't tell you what the numbers are, but we are happy with the figures which are in line with our business plan," he said.

"It is very new; a market creation activity. A small number of people are aware but they will grow over time."

However, Bennett still had doubts. "Questions remain over the attraction to merchants," she said. "They will not reach every mobile customer and there is small real estate on a phone screen. Internet-based payments are more attractive.

"If Vodafone thinks that m-pay cards will be a money spinner over the next few months it will be disappointed. It should look at it as an investment and a learning curve."