Millicom International Cellular S.A. (MIC) (NASDAQ: MICC), announces the launch of a new Internet-based payment system for shopping on the Internet using GSM mobile telephones. GiSMo is a secure and easy to use payment alternative to the use of credit, debit or charge cards, which intends to make payments occurring in blind environments fraud-free and open up the European on-line shopping market. GiSMo is being launched today in Sweden at the Internet World Trade Fair in Sollentuna. Sweden has Europe’s largest number of active Internet shoppers and the highest density of mobile phone users. GiSMo will then be rolled out in Germany, the UK and France during the year 2000.
How does it work? GiSMo shoppers purchase items by simply giving their GSM telephone number at the point of sale, either directly or by telephone. The merchant retailer then transfers the number on line, via a dedicated Internet access connections to GiSMo’s processing centre in Luxembourg, where a personal identification number (PIN) code will automatically be randomly generated for each transaction. The code is then sent as a text message or short message service (SMS) to the GiSMo shopper’s mobile phone via the GSM network, and the purchase is only executed if the PIN is given to the retailer and entered on line for verification with the processing centre within one minute. This will ensure that the person carrying out the transaction is verified as the authorised person. The centre then sends a final message back to both the seller and purchaser confirming the acceptance or rejection of the transaction.
The amount of the transaction will then be wire-transferred minus fees and charges to the merchant within a few days and the client will be invoiced on a monthly basis by email, in secure ‘portable document format’ (pdf), for payment by direct debit from existing banking facilities or credit financing arrangement with GiSMo Finance. Both merchants and clients will receive monthly email statements, also in secure pdf format.
What are the advantages? Online shoppers will benefit from the maximum protection against fraud. It is not necessary to transfer any credit, debit or charge card details to the merchant on-line, thus addressing the potential Internet shoppers’ principal fear of the theft and fraudulent use of card details. In 1998, VISA Europe announced that 49% of credit card fraud occurred with Internet transactions which only make up 1% of all credit card transactions. The reason for the high incidence of fraud in a “blind” environment is that a consumer’s credit card details are held on the merchant’s database for use in future purchases and that the consumer is not accurately identified at the moment of the purchase.
The GiSMo transaction involves a specific buyer identification which is not the case with any purchases with payment card details. Furthermore, with fewer intermediaries involved, the risk of disputed or fraudulent transactions is considerably minimised.
Merchants will benefit from considerably reduced transaction fees and charges and the free provision and installation of proprietary point of sale software. GiSMo also takes all the work out of tax calculations and regulatory compliance. Applicable taxes will be charged based on the buyer’s country of residence and the differing requirements of the business and legal infrastructures will be met, with the merchant receiving a full report.
How to apply? All GiSMo shoppers must be GSM mobile phone subscribers and will need to sign up to GiSMo Finance by filling in a simple application form on the GiSMo website. Each consumer will be credit-checked and then be required to sign GiSMo Finance’s general terms and conditions before being registered as a GiSMo client.
Similarly, merchant retailers who wish to offer GiSMo as a method of payment, will be credit checked, asked to fill in the application form on the GiSMo website and sign an acquisition contract. The interface to the processing centre in Luxembourg may be easily installed by a CD-Rom provided by GiSMo. GiSMo intends to acquire merchant relationships on an international basis. GiSMo can already, from today, be used for payment at shops listed on the new portal, Everyday.com.
Michael Oiknine, Managing Director of GiSMo, commented today: “GiSMo represents a revolution in payment. For the first time, this system allows for secure ‘one click’ payment over the Internet without the necessity for handing over credit or account details to the seller. We have taken an existing technology platform, the mobile phone, which has more existing users than any credit, debit or charge card, and combined it with the world’s largest GSM clearing house and the enormous potential of the Internet, to provide retailers and consumers with an easy to use, low cost and fast method of payment.
“People are increasingly demonstrating their desire to buy products over the telephone and Internet in essentially blind environments. GiSMo will enable this fragmented payment market to be opened up, making e-commerce a reality for everyday purchases. We are already seeing the possibility of wireless Internet access and GiSMo will enable the transactions which should flow from this revolution as well as integration with other future payment system standards.”
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