Thursday, September 18, 2008

The Platform Is Ready

Apple isn't the only company with an actively used micropayment system, Microsoft has one too for all its gaming and music Points, the Marketplace. Apple charges its small payments directly to whatever payment method you have attached to it, Microsoft makes you buy points in packs, and thus probably has an easier time charging minute amounts for items without running into minimum purchase amounts their credit card transaction processor demands. Transaction costs are an issue when you are dealing with amounts under a dollar, yet it is in the small amounts that very powerful things happen, impulse things, when combined with one-click approval. Phone network operators, of course, have a lot of experience with these kinds of transactions, billing a dime here for a text in the evenings and fifty cents there for a text before hours, keeping track of items to know when you have used up your plan bucket of minutes / texts / bytes, to then start charging you by the electronic blip as they see fit, no matter how much or little.

In my opinion, mobile phone operators should be kicking Apple and Microsoft in the seat when it comes to payment for electronic items. They have had a complete infrastructure ready to go for years and years now, with little personal machines in everyone's pocket that have little encryption chips built in and are built to be identifiable by the network so the right machine can be billed, whether to the credit cards attached to the account or pay-as-you-go for minors. Yet somehow we never really got any further in a mobile payment infrastructure than hearing that I can now pay for parking in London by texting the right number, which is the same kind of excited news we shared about Finnish parking in 1999. The Felica system of having a contact-payment chip embedded for the subway has taken Japan by storm, but hey, that was kind of expected. And yet every western large city or small country is re-inventing the chip-card payment system for public transport, while GSM is a global standard. Dudes, I should just be waving my phone at anything with wheels or track that looks vaguely like it lets everyone on, and automatically have the price of the ride deducted from my cell bill. Same for condom machines in bars, if not groceries.

Or web pages. Look, supposedly these days more people in China are accessing the Internet through mobile data services than people using the Internet over computers in the USA. I have no idea what that statistic actually means, but I am told it ran in The Economist recently. Asides from the question of what mobile service these Chinese people are using, the fact is that their mobile phone operator should be able to make it really easy to pay minute amounts of money for these services, seeing as they transport every packet of it. All you need is the right hooks in the right layer so mobile web page providers can set a price. Oh, and of course, not being asinine as an operator, with taking a 70% cut for example, or having a walled garden, those things just stifle innovation and makes companies waste energy trying to "get on the deck" which they should be using to innovate.

Of course there are big issues with micropayments on the web. In the heyday of having a fun little webpage, now rapidly losing its pagerank, I would get 15.000 visits on it a month. Being able to charge half a penny for that would have been nice, but having been charged half a penny would have been, well, a slight bit less nice: since I easily surf a hundred web pages a day, paying 50 cents every day for my surfing would have been slightly annoying, and a $15 charge a month over what I am already paying for my net access would also not break the bank, but sheesh. And is it worth while to check a preview first for a page that would cost you half a penny? Or make and maintain a preview of that page? Clicking YesIWantToPayHalfAPennyAlready a hundred times a day? No, the power of the web is that so much of it is still seemingly free, so much of it supported by an ad-word tax on Internet purchases.

But no, mobile operators, stars at charging micropayment amounts, have actually not seriously opened up their facilities to be the micropayment platform for all things electronic and many tangible, and thus PayPal and random banks keep trying to create one that involve sending each other SMSes or making awkward calls while standing in line for a cash register. The operators tried a bit, but went nowhere.

But if they are not the platform, the operators are good carriers for the goods and the payment data, though. Amazon is proving something about that model with their Kindle that uses Sprint as its carrier. Although it is not being used to purchase content with small payments, it is getting much of it right: seamless, quick, instant. For some commercial entity to make this as convenient for large swath of the web, and not just what is in their own store, this entity would have have a financial payment system ready to go, you know, a Checkout system, and underpin a lot of the web already by, say, being the main way people find anything and tracking which pages they go to already, perhaps even get their hooks deep into the browser, or, oh I am just blueskying here, release a browser themselves so it can easily put in the payment hooks for people making pages and services, and oh god, somehow have a way of tying what you look for or browse with their browser to your phone account, perhaps by, god, how am I coming up with this, being in your phone. Oh that would be silly, that company would have to somehow be releasing a program for free that phone operators would want manufacturers to put into phones, so that your phone OS was tied to billing was tied to your personal ID that this company also has for you on the web... Oh. Right.

Let's hope they "Don't Be Evil". Or else, if it will be evil, they haven't thought of this tying everything they own together into a pervasive web nd mobile payment platform. Or simply can't make a phone OS popular enough that a huge chunk of the world wants it. Then again, Motorola proved with the RAZR that you can put an utter garbage OS on a phone and it still will be lapped up as long as the shell is super cool, but then again, what I have seen in spy shots so far isn't that cool, so a brilliant phone OS will have to be the selling point (and making those is hard). Let's see what Google's Android is really up to in 5 years. My bet is it won't just be all about sending you mobile adword links because it knows where you are right now.