Widespread use of mobile phones to access the Internet and purchase goods and services online took a step closer to reality today as Visa International and Nokia announced a cooperation agreement to introduce payment solutions for mobile electronic commerce.
The world's largest consumer payments organization and the world's number one mobile phone manufacturer have signed a global agreement to develop ways in which financial institutions and mobile phone operators can offer secure payment services to their customers via a mobile phone. The organizations will carry out joint market development activities and pilot technical payment alternatives.
Under the agreement, Nokia and Visa will introduce a standardized means of making secure payments using a mobile phone, meeting different market requirements for security, risk management and dispute resolution.
Both organizations are actively working on establishing open specifications, based on the Wireless Application Protocol (WAP) standard, to enable a mobile phone user to make secure, guaranteed payments over the Internet.
As well as conducting joint marketing and business development activities, Nokia and Visa will collaborate to simplify the payment process by developing a mobile e-wallet to allow for 'simple-click' purchases. Nokia will also provide server applications based on WAP which will transmit payment data securely over wireless networks to financial institutions.
A pilot of the technology will take place later this year with MeritaNordbanken in Sweden and Finland.
Said Hans van der Velde, president of Visa's European Union region: "This is an exciting and tangible partnership which will have long term benefits for Visa member banks and cardholders, mobile phone operators and users worldwide. The last decade saw a phenomenal growth in payment cards, mobile phones and the Internet.
"This agreement will combine all three to provide one of the first great innovations of the 21st century."
Yrjo Neuvo, executive vice president and chief technology officer of Nokia Mobile Phones, said: "Soon, mobile phones with wireless Internet capability will be in almost everyone's pockets, building the basis of a truly mobile information society.
"Global security brands established by leading payment associations and financial institutions will have a crucial role in paving the way for consumers to adopt mobile commerce which is an important functional part of the mobile information society."
Nokia is developing and testing various implementations of secure card payments in the mobile environment, including a pilot of Visa card payments via a dual-chip GSM mobile phone. The mobile phone will contain two plug-in microchips, both the size of a SIM (Subscriber Identity Module) card.
One chip -- with SIM functionality -- will be used to identify the subscriber to the phone network and allow the phone user to make calls and access the mobile Internet.
The second chip will be used to make authenticated Visa credit or debit payments. This second plug-in chip will be issued by the user's bank, enabling the bank to manage the risk and security of the payment transaction.
"Our goal is to ensure that Visa member banks remain competitive in light of rapidly changing market needs and advances in technology," said Stephen Schapp, executive vice president of Global Products at Visa International.
"Visa can do this by working across industries -- and with companies like Nokia -- to ensure that new technology platforms accommodate the needs of payments and related financial services. This partnership highlights Visa's commitment to introduce secure, standardized payment solutions for e-commerce in these new environments."
Yrjo Neuvo added: "We see open standards and open service provisioning in the wireless Internet as crucial elements, ensuring global competition and a fast adoption of the latest innovations -- which, in the end, benefit consumers the most."
In the next two to three years, consumers will increasingly rely on a range of mobile devices to access the Internet. It is generally expected that customized and personal devices will be the prevalent means of delivering a broad range of online services to consumers worldwide. Many see the mobile phone as becoming the most trusted, personal device.
The growth in mobile phone usage over the last few years shows a clear trend towards small portable devices and Nokia estimates that there will be one billion mobile phone subscribers by the end of 2002.
The proliferation of these new consumer devices means that financial institutions can offer access to banking and other interactive financial services, including payment, at any time and from any location.
Visa's New Electronic Commerce Channels group is actively working on establishing strategic alliances with device manufacturers and other key industry leaders to enable and promote electronic commerce for mobile phones, interactive TV and other developing channels.
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