This post first appeared on my SAP Blog on January 17, 2013.
A few days ago, BBC News published: “Payments by text message service to launch in UK in Spring 2014.” I found this story fascinating – not that payments may be made by text message, as it’s been done for years in various markets such as in Kenya. One can also send money via smartphones, using apps, today as well. No, what is fascinating is that text messaging is once again the bearer of this payment information.
What this really means is that, the banks involved, (and the story lists eight), covering 90% of the account holders in the UK, specifically want to use text – AKA: SMS – the most ubiquitous and far-reaching text-based communications medium, ever. Not another app or an OTT app, but SMS. The SMS payment scheme is very well thought out by the UK Payments Council. While there are still technical requirements to sort out, the overall plan is safe, secure and will be available to virtually everyone.
The UK mobile operators must be welcoming this plan with open arms, because out goes another reason for subscribers to migrate the texting to a non-SMS-capable, Over-the-Top service such like WhatsApp, which has caused SMS traffic drops for many markets. The the existence or even contemplation of a service like this is a rich testament to the stability and ubiquity of SMS.
Around the world, media has focused on “the decline of SMS;” however, what they fail to mention is that nothing has even come close to replacing its vast reach and utility. Certainly, mobile messaging is evolving. We now have RCS (many times, under the joyn brand) launched at many operators around the world; however, guess what – it is phone number based and uses SMS (or MMS) to send messages to the other party if they are not also an RCS user. Additionally, in some markets, OTT players that fully interoperate with SMS and use traditional telephone numbers (e.g. the NUVOs) could also potentially be part of similar payment schemes.
The bottom line is that services like these – especially those that require or promote the exchange of value or payments, whether real or virtual currency, can be delivered using simple SMS with a variety of security mechanism, and many times, using the existing messaging infrastructure. While there certainly will be some back-end requirements , such as linking telephone numbers to accounts – whether banking, payment, credit card or some other type of account, the ability to then leverage a well-known and universal medium is paramount.
Messaging is evolving; however, in many places, it not only evolves to innovative OTT apps, and next-gen networks such as RCS, but also through extending the already-giant reaches of SMS. In the United States, for example, as in several other countries, it is being contemplated to “SMS-enable” fixed or land-line telephone numbers by a variety of NUVOs / OTT players. In fact, it is already happening. Again, as this is phone number-based SMS, even these numbers could be participating in a similar payment scheme. For example, think of sending an SMS with a secure ID + a dollar amount to the restaurant’s phone number to pay your bill. When received and accepted, you would get back a confirmation text with the details.
I think that mobile payments through SMS is the beginning of a resurgence of a new generation of innovative capabilities that leverage “traditional,” phone number based SMS – especially for services that require transport of value between individuals, as well as companies. In fact, there is no reason why a short-code could not be tied to an account number. SMS would still be used to make the payment. This could be a cheap way to support mobile payments for retailers (e.g. Pay by Credit Card, Cash, or Text your Payment to 12345). And the nice side-effect of this all, is that it helps stabilize SMS.