by Lauri Kinkar

MasterCard and VISA are launching a mobile phone payment pilot in Taiwan and Korea respectively. According to Finextra, in Korea it is possible to order a VISA payment programme via SMS and after installing it, the consumers can make so called contactless credit card payments using their mobile phones. Presumably MasterCard will use a similar solution in Taiwan.

In Estonia mobile phone payments as such are one way or the other pretty well-known. When I want to read today’s business paper, I order a password per SMS, pay a certain amount of money for it and log on. When I’m travelling on a train from Tartu to Tallinn in a business class and do not have any cash on me, I pay for my ticket using the m-payment of banks, dialling 1214*merchant’s code*125 and call. I enter the PIN code on my phone’s keyboard and a second later the conductor receives an SMS confirming that 125 EEKs has been deposited into the account of the railway company.

Which parallels can be drawn between our payments and the efforts of large credit card companies? And which are worth drawing?

Firstly, the solution, or payment programme ordered via SMS versus making a call/sending a text message. Calling or texting is, of course, much nicer and the requirement to first download something and then install it, creates an inevitable barrier right in the middle of the ease of use. What if my phone does not allow to install or launch such programmes?

At the same time the scope of VISA and MasterCard has to be considered - it would be rather painful to make SMS or call connections in all the target countries with all operators. (Of course, why do we have then local gateway providers? Presumably they have everything necessary in one place.) Without knowing the technical and legal background, there is still a shadow of a doubt whether VISA and MasterCard have chosen the best payment solution from the consumer’s perspective or can anything be done better.

To sum up, when we talk about Estonian payments and compare them to the attempts of the credit card companies, we must admit that on one hand we are comparing apples to horses. A local bank can offer its clients on local level a very direct interaction with the account, using whatever means. Credit card companies deal solely with credit card payments and proceed from the card as such.

On the other hand, for a payer in a payment situation these might one day be two competing solutions in the same geographical spot. In that case it seems that call-based payment systems rooted in Estonia might have an advantage because of the ease of use. At the same time there is nothing more welcome than all sorts of attempts to fit credit card payments inside a mobile phone, especially by two largest credit card companies, who potentially have the strength to change the behaviour of a large amount of consumers. Good luck trying!