The most common definition is that it type of transaction processing in which the mobile handset plays a key role in the initiation, authorisation and/or realisation of the payment.
The mobile payment platforms benefit the merchant, the consumer and the mobile carrier by delivering a faster more secure and more convenient transaction experience.
Remote mobile payments can be initiated using short message service12 (SMS), also known as text messaging, and wireless application protocol 13 (WAP) technologies. Most mobile phones are equipped to handle SMS functionality and WAP technology, and thus are readily accessible and ubiquitous. SMS. To make mobile payments using SMS, the user must set up an account with a mobile payment service provider (MPSP), for example PayPal or TextPayMe. The user then links a bank account, credit card, debit card, or prepaid card (funding options vary) to the account associated with his or her mobile phone number.
Mobile banking
Mobile banking services provide an innovative and convenient way to access banking facilities. The current range of services offered include balance inquiry, funds transfer, bill and financing payments, mobile prepaid airtime reload, and requests for statements and cheque books. The range of mobile banking services can be further expanded to take advantage of the increasing number of mobile phone users in recent years. Nevertheless, the banking industry is confident that mobile phone subscribers will be attracted to mobile banking as more services are added to the current suite of facilities.
Debit cards
While there is a potential for debit cards to be a viable alternative to cash, its adoption in Malaysia is still low. Debit cards offer benefits particularly to consumers who are not comfortable with paying by credit or are not eligible for credit card facilities such as students. With debit cards, the cardholder’s account will be directly deducted when making purchases, benefiting the cardholder who needs to carry less cash and able to enjoy the efficiency and security offered by debit card payments.
Electronic Purse
The MEPS Cash electronic purse, which is incorporated in the Bankcard and MyKad, is an alternative electronic payment mode to using cash for making retail payments. Since early 2004, payments using MEPS Cash are accepted at various closed communities such as Bank Negara Malaysia, UniversitiUtara Malaysia, Cyberjaya and Putrajaya The use of another electronic purse, the Touch ‘n Go card in the transportation sector will facilitate the reduced use of cash and coins in the sector. Following the Government’s decision to designate Touch ’n Go cards as the only electronic payment method at toll plazas, the volume and value of Touch ‘n Go transactions increased by 45.2% and 29.6% respectively in 2004 compared to the previous year.
Moving forward, Bank Negara Malaysia will work together with financial institutions to offer efficient and secure payment transactions at lower cost so as to enable more extensive utilisation of electronic payments channels. Bank Negara Malaysia, together with the banking industry and support from the Government sector, will continue to promote efficient and effective delivery channels and electronic payments, in line with enabling the payment systems to facilitate economic activity and contribute to financial stability.
As the electronic payment channels become more easily accessible, user-friendly and offered at a low cost, it would thus provide the opportunity to shift the remittance flows from the informal to formal channels.
Indeed, electronic payments can be one of the strategic tools to meet these objectives and achieve higher economic growth. Electronic payment increases operational efficiency and improves productivity levels through expedient payments and receipts of funds. Electronic payments would also provide the speed and convenience of making payments from any place or time. It also reduces costs through the reduction of redeployment of resources used for handling cash and cheques. Accelerating the country's migration to electronic payments has therefore become a part of Malaysia's larger national agenda to increase the efficiency of the nation's payment systems which would ultimately improve the competitiveness of our economy.
Finally, for mobile payment products to succeed and achieve widespread acceptance, we need to strengthen consumer confidence in the safety, security and reliability of mobile networks as a means for consumers to access financial services. Indeed, mobile digital signature, which ensures the confidentiality, authenticity and integrity of payments initiated from mobile phones, is one of the ways forward towards building a secure mobile infrastructure that is conducive for the delivery of financial services.
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