Digital Transactions Authoritative, insightful and timely information for payments professionals
Hoping to take advantage of the related trends in mobile commerce toward so-called off-portal business and direct-to-bill payments, international m-payments processor Valista Ltd. has introduced a new version of its transaction-processing engine, which is aimed primarily at mobile-network operators and Internet Service Providers. The latest release of the engine, called PaymentsPlus, is said to be the first available in m-commerce to allow split payments?that is, payments by card, short-message service (SMS), stored value, electronic coupons, or direct-to-bill?within a single transaction, which might involve multiple content merchants. Based in Ireland and with a North American headquarters in San Mateo, Calif., Valista is reacting to what it sees as a general movement away from SMS as a payment mechanism. Instead, the company says, content providers and mobile operators are starting to prefer a direct-to-bill system. This allows the operators to control user authentication and payment authorization, and to trace transactions from the time users initiate them to the time when they appear on users' bills. SMS-based payments, which rely on short codes to trigger charges to a bill, are as a result less traceable by operators, leading to abuses by some content merchants. At the same time, direct-to-bill allows more flexibility to merchants in how they price content. Short codes force pricing into narrowly defined bands, which can be difficult to vary without issuing more codes. “It makes it hard to be creative with pricing,” says Fran Heeran, chief technology officer at Valista. Also, high-value digital content like games lends itself to direct billing more so than content like ring tones, which themselves are delivered by SMS, Heeran adds. As a result, “direct-to-bill is being pushed more by operators,” he says. The trend toward direct-to-bill and away from payment via SMS has gained urgency from the growing tendency of content merchants to deal directly with users, rather than sell to them through carriers' portals, Heeran says. This move to so-called off-portal selling has created a need for sronger controls by carriers over processes like authorization, authentication, and end-to-end transaction tracing. “The dramatic shift to off-portal created a need for direct-to-bill,” says Heeran. “It turns [network] operators into payment issuers, because they're allowing their billing mechanisms to be used.” SMS will live on, Heeran says, as a “discovery channel,” that is, a means by which users signal their interest in buying content. The payments themselves, though, will be increasingly handled by back-end systems through card networks or carriers' billing operations. This, he points out, is essentially the model PayPal Inc. has adopted with its new PayPal Mobile service, which the Internet-transaction processor launched in April. With PayPal Mobile, payments ultimately hit users' PayPal accounts, which are funded either by credit cards or via automated clearing house debits. “That's a good example of non-operator direct-to-bill,” Heeran says. Formed in 2003 out of a merger of two payment-software companies, Network 365 and iPin, Valista signed America Online Inc. as its first U.S. client in November 2004. Overseas, its clients include Vodafone UK, NTT DoCoMo, and France Telecom's w-HA. The company processes more than 20 million transactions a month for 2,500 merchants and other organizations worldwide.
