Moxmo, small e-money issuer, is broke

Emerce reports that Moxmo, the small e-money issuer that has been operational for 2,5 years, has gone bankrupt. This is the second failing e-money startup who focused on the mobile phone as a payment mechanism. The first one was Digipay.



Now was their business assessment to focus on the mobile phone as a payment mechanism wrong? No. The market for ringtones, premium services, ticket sales is huge and getting a slice of that at provision percentages (10 %) well below those of mobile operators (30 to 40 %) attracted quite some investors.



What did go wrong was the legal part. The start-up were held to comply with supervision law, given that their payment mechanisms was e-money. And they assumed, given the EU-regulation on e-money, that any player who was operating a similar scheme would be held to the same standards. After all, the regulation clearly aimed at a functional approach; the supervision would apply regardless of technology.



Unfortunately, the functional approach was one bridge too far in practice. The Dutch supervisors did not dare to apply the e-money law to the incumbents in the mobile payment market (5 operators, generating hundreds of million euro in the third-party PRS-market). So during two years, the supervision of these players was stalled. Which was just long enough to wear out the new startups who had betted on equal supervision for all e-money players in the market.



It is only too sad that it took the Dutch supervisors two years to formally recognize that mobile phone operators that allow third-party payment from their pre-paid accounts are indeed e-money institutions that need to be supervised. Even sadder is the fact that we will most likely need some 2 more years of European and national discussion before the whole market is properly supervised.



So in the Netherlands I would like to close the chapter on innovation and regulation with the following hypothesis:

The succesfull innovation of new payment schemes in a previously unregulated market depends not so much on the existence of regulation, but mostly on the willingness/boldness of the supervisor to ensure compliance with the rules, regardless of size and power-position of the supervised.

Oops... payment of 3000 euro via the phone?

An active student, Tjalling Kuipers, has started a public discussion on the new product feature of a phone payment product: KPN Switchpoint. The product now allows for payment up to an amount of 3000 euro. Quite a lot and all the checking is IP-address, account number and phone number. So the premium services fraud and 'ghost-bill' problem may now become bigger due to the unsecurity in the home environment.



In the back office, KPN makes use of a one-off direct debit mechanism. Although formally not allowed by banks, an increasing number of players in the Internet market 'forget' these rules and find their bank willing to use the mechanisms to ensure quick payment. The consumer however has to suffer, as they are unable to reverse the payment in case of fraud.



My solution to this problem, which will hopefully be introduced any time soon now, is to shift the reversability and fraud problem to the acquiring bank involved in these set-ups (see this previous logentry of one and a half year ago). Consumers should always be able to reverse the payment of an off-line direct debit. This provides the merchant, payment service provider and acquiring bank the incentives to ensure that fraud levels remain low.

BRINXPAY.NET ?

Speaking of Paypal immediately makes Brinxpay show up in the Ads. A German version of Paypal, so it seems. See theirsite here.

Receiving payment for Adsense

This summer I received Googles first cheque for payment of the Adsense ads. Of course a cheque, because that's the US way of doing payments. And although the cheque is an obscure payment instrument for the Dutch, I only needed a few mouse clicks to arrive at this Postbank page for information on cashing the cheque. Too bad, that the fee for cashing turns out to be € 12,3 (on a sum of € 104 euro).



It would be better for both Google and me if they would use Paypal instead. Perhaps for the next payment?

Paysquare to lower fees for some

Het Financieele Dagblad (paid access) reports that Payquare is countering the B+S bid for credit-card fees in the restaurant sector by lowering its merchant service charge with 0,5 %. The lower fee is applicable to enterprises that are members of the Koninklijke Horeca Nederland.

Bibit to merge operations with Worldpay

Worldpay, focusing on small and medium sized enterprises, will merge its operations with those of Bibit, focusing on the large European players. Read the Dutch Emerce - article.

Electronic Payments Interoperability (RFI)

See this OMG Document.

European Commission sees bank kartel in France deter entry for newcomers

Het Financieele Dagblad (paid access) and the IHT report that the European Commission has issued a statement of objection to nine French banks and their collective organisation: Groupement des Cartes Bancaire (GCB) of forming a cartel to prevent market entry in the market for payment cards.



Good news is that the Commission's press release also reads:

The Commission’s statement of objections in no way challenges the legitimacy of GCB as the joint and effective operator of the CB card payment system in France.

So it's not a call for a different structural or institutional arrangement of the card industry.

T-mobile allows Wap-billing: 3 merchants signed up

To add to the continuing debate on e-money payments via mobile phones, Planet Multimedia reports that T-mobile has payment via WAP-billing operational. So where Vodafone needs to further develop its system, T-mobile has it up and running (with only 3 merchants though...).



Wap billing allows for payment of greater amounts than with SMS and has a business model where T-mobile shares revenue with the content provider.

Norwegian central bank study on (e-)payments and fees

The Annual report on payment systems is an important part of Norges Bank's oversight of the payment system. The report provides an annual update of developments and prices in the payment system. The report for 2003 also provides an overview of important events in the area and a review of various issues related to international payment systems. The report, including a statistical annex, is now available in English on Norges Bank's website.

Rabo and Privver cooperate

A long time it was silent around Privver, the digital post and e-billing company on the web. But E-merce reports the cooperation with Rabobank in the domain of e-billing. Rabobank will present the digital bills in their e-banking application, avoiding the type-errors now made by customers that pay via e-banking (and need to type in a 16 digit payment reference number).

Rounding cash payments

Yesterday the Dutch central bank announced that a trial with rounding cash payments has succeeded. As of September this year, merchants and retailers will choose to round cash payments to the nearest 5 cents (as we did before when we still had the single guilder-cent). The cost-savings will amount to approximately 30 million euro. And the Society Platform for Payments Issues may take the credit.



Also on the central bank website: a free CD-Rom to learn yourself the safety features of euro bank notes. Given that the CD-rom is free for the public, my guess is that the central bank will soon run out of CD-roms. And they will also experience the above average demand that occurs if you provide something for free.....

Further developments in the m-payments arena

Planet Multimedia reports that Vodafone is developing a payment method whereby a click on the WAP-link effects a payment for tickets up to an amount of 10 euro. Essentially the Dutch version of m-pay, I presume.



Meanwhile Beep.nl is investigating how to add the Rabobank payment product Minitix to its payment portal for mobile payments. Effectively Beep acts as an integrator just like Bibit, but then for payment via mobile means.



Where will this end?

I think large retail players will operate their own payment brands; all the others will work with integrators or choose the most efficient and cheap payments brands in the market.

Insiders guide to eCommerce payment

A very useful piece of work with 20 practical tips for better e-payments.

Goodbye Jan !

Today we see another retirement. This time Jan Jonkheer leaves the Dutch payment scene after a multitude of productive years in direct debit, coins (he transported the special purpose coin that was used in the 1974 Final of Germany-Netherlands), credit-card and what have you.



Good bye Jan, and until we meet again !

Phones Become All-Purpose Payment Devices

See this article in PDAs News - Designtechnica News.

Retirement J. Verhaegen

Today is the day that payments-veteran J. Verhaegen retires after a long and productive career in the industry. Long ago, when too many policymakers were too vaguely debating the formation of a national payment circuit, he set up a small group of 4. This group decided on a workable migration path for the realisation of the national payment circuit (a more effective set of interoperability standards between the two payment circuits in the netherlands). And this is only one of his many achievements.

Royal Bank of Scotland buys Bibit Payment Service Provider

The Financieele Dagblad reported on June 16 that Royal Bank of Scotland has

bought payment service provider Bibit in May. Price was most likely 90

million euro. And so we see how innovation may occur outside the banking

sector to become part of the sector as soon as viability has been proven.

Add another payment mechanism and make more money...

Scott Loftessness informs us:

CyberSource has released the results of a recent study it performed that concludes that merchants can convert as many as 20% more customers by offering them more payment types to choose from.



Those merchants offering one payment type, such as general purpose credit cards, for example, convert 60% of their shoppers. Those offering four types, e.g., credit cards, gift certificates, eChecks, PayPal, etc., convert 72% of their shoppers -- a 20% increase.



The survey results are incorporated into a new industry whitepaper from CyberSource, "The Insider's Guide to eCommerce Payment".

Albert Heijn stops with savings account (cooperation Aegon)

It started out in februari 2001 as a loyalty card that also allowed savins. To that end Albert Heijn cooperated with Aegon. This week the announcement is made that the loyalty-savings card has 275.000 customers and will be taken off the market. So does this mean that retailers entering financial service won't work?



My guess is that retailer banking might work, but the current situation at Albert Heijn is one of cost cutting and streamlining. So all eyes are now fixed on KBB Vendex with their financial services unit.

Stimulating mobile payments...?

Planet Internet informs us that our Ministry of Economic Affairs is setting up a group that wants to stimulate a common standard/payment procedure for payment via the web and mobile phones. What is intruiging is the referral to Chipper/Chipknip in the accompanying press release.



It is only too often that people say that the e-purse schemes Chipper and Chipknip were not a success given that the technology was incompatible. However, this is incorrect. From the outset, both schemes aimed for and allowed for interoperability, given that any business calculation shows this is the best way forward (see also the dissertation of Leibbrandt). And as soon as the specifications were available, terminals were built that allowed both schemes.



What happened in the market however is that the competiton between Chipper and Chipknip became very tough, including big advertisements, deals with merchants to only accept the one scheme and not the other etcetera. But fact of the matter is that in 1997 a common chipknip/chipper terminal was available and in use on counters in retailers shops.



Given the competition between Chipper and Chipknip and the uncertainty as to their future market position, many retailers refused to choose the one or the other. This buyers boycot lead Chipper (second in the market) to re-evaluate their market position and their possibilities to become bigger than Chipknip. The conclusion was that it would be best to eliminate Chipper and migrate to Chipknip.



So the Chipknip/Chipper history is not one of incompatible technical standards, but one of strong competition in the banking market, followed by consolidation towards a more efficient setting. Now isn't it interesting that most people don't want the Chipper/Chipknip history to be repeated while on the other hand banks are urged to be more competitive?

Danish e-purse scheme Danmont closes down

PBS announced (end of May press release)that it will close down the scheme as of December 31, 2005.





Nils Hilbard, director of payment cards in PBS A/S states among others that:

"The perspectives of having an electronic purse has not attracted enough merchants to accept Danmønt. The limited user possibilities have limited the Danes' interest in having a Danmønt card. We have therefore decided to close down the scheme from 31 December 2005. Cards can still be acquired, used and loaded until the end of 2005."



Dankort (the debit/credit-card) will fill the gaps that Danmont leaves. And I'm sure some other payment mechanisms (contactless) may enter the scene some day.