The rapid development of mobile payments is illustrated by two new reports – one from the European Payments Council (EPC) is a white paper highlighting how the mobile channel can be used as a launch pad for SEPA payment instruments if appropriate collaboration and standardisation work is done now; the other is from analyst firm Ovum, warning of the need to improve security collaboration.

According to the EPC, “the availability of practical single euro payments area (SEPA) mobile payments, either account or card-based, would provide a realistic alternative to cash and cheques”. The EPC White Paper on Mobile Payments where this view is expressed maps out the EPC’s initiatives in this area and is designed to facilitate the eventual implementation and interoperability of user-friendly mobile payment solutions across all 32 SEPA countries. It explores how mobile payment services can be delivered via cooperation between service providers active in the banking industry and the new players emerging in the mobile ecosystem, and is intended to act as a clarion call for increased consultation.

To illustrate the point, Gerard Hartsink, chair of the EPC, says the Council is already working with groups such as the GSMA on standards and business rules for the initiation and receipt of SEPA payments by mobile – the pair launched a consultation on SEPA and mobile contactless payments in January.

“The aim is to develop proposals that support collaboration and standardisation and which form the basis for future interoperability,” he says. “Our intention is to establish a service framework sufficient to reach potentially all payers and payees in the European Economic Area (EEA) and to create a trusted and secure environment for the multiple stakeholders active in the field.”

Dag-Inge Flatraaker, chair of the EPC M-Channel Working Group, adds: “The EPC White Paper on Mobile Payments responds to changing customer requirements in the payments market and demonstrates how mobile payments can increase efficiency, effectiveness and convenience. This paper creates awareness on how to best combine the benefits of state-of-the art SEPA payment instruments for credit transfers, direct debits and card payments handled through one of the most popular and versatile devices introduced in the past two decades – the mobile phone.”

The Ovum report entitled The Malware Threat to Mobile Banking also calls for more collaboration, saying that banks providing m-payment services need to begin working with mobile network operators and handset manufacturers to enhance security measures ahead of an anticipated explosion in malware threats.

The analyst firm believes that mobile banking and payments is inherently vulnerable because handsets can be stolen, lost or hacked more easily because they are used in situations that are typically less secure than an office or household computer. This is why the report’s author Graham Titterington, is calling for banks, network and device vendors to cooperate more fully, perhaps emphasising better encryption to stop ‘over the air’ mobile hacking and better keypad locking techniques and so forth. He also emphasises this is not just an end user issue, warning that malicious software could infect a bank’s entire operations, via the mobile channel, unless security is enhanced. “IT malware that compromises back-end servers, but is harmless in the wireless environment, may be passed through the interface,” he said, adding that mobile phones had become powerful enough to constitute a standalone security threat to entire IT architectures.

Ovum advises that layered defences have to be designed to a standard that is at least equivalent to that presently deployed for internet banking, but these security measures should not just be a simple copy and should be specific to the mobile channel and its characteristics without impairing end user usability. Quite a challenge then, but better encryption and cooperation is a good place to start.

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