SMS Will Slip to Minority of M-Payments by 2011, Survey Says

Direct charges to subscribers' bills and credit and debit cards will account for the bulk of mobile payments in five years, with today's preferred method, short-message-service (SMS) payments, dropping to a minority of transactions, a survey released this week indicates. Only 6% of respondents to the survey, attendees at a recent New York conference concerning on- and off-portal mobile content, said SMS short codes would account for most mobile payments in 2011. By contrast, 44% said direct-to-bill charges would be the most widely used method, with 32% favoring cards. Stored value was preferred by 6%, PayPal by another 6%, proximity payments by 2%, and person-to-person methods by another 2%. Representatives of carriers, content providers, and payment processors constituted the respondents to the survey, which was sponsored by Valista Ltd., an Irish provider of mobile-payment software with U.S. offices in San Mateo, Calif. Though a nascent payment technique in the U.S., premium SMS is widely used in Europe for payment of mobile-content downloads. Now, though, it is increasingly seen by some processors as inadequate to the growing needs of mobile commerce, chiefly because of its susceptibility to fraud. Cards and direct-to-bill methods, on the other hand, are seen by some observers as providing more robust authentication and authorization technology for a market that is carrying more sophisticated, and hence more expensive, digital content (Digital Transactions News, May 22, 2006). The growing trend to offer content on sites not controlled by mobile carriers, known as off-portal content, is also pushing the trend to direct-to-bill and card-based payment, some say.