1. Department of IT, American University in Dubai UAE Mobile Phone Market Mobile phone infrastructure has grown exponentially over the past few years to cover large numbers of people around the world. A payment system that takes advantage of this existing infrastructure will be highly attractive. The penetration rate of is by far larger than any other type of technology in history. In Asia, it is expected that by 2009, 901 million people will be using mobile phones. Research Team Haikel Alhichri, Basma Marhoon, Mohammad Alrubaiy, and Amirhosein Sharifisistani www.aud.edu Mobile Phone Payment System Fig. 1. New payment system based on SMS and the internet. It uses the mobile-operator as the third party to arrange the payment. New IT Platform Fig. 2. New IT platform required for e-commerce website to use the new SMS payment system. The mobile network is the link between customers mobile phones and the business. Once the transaction 1 2 invoice (SMS) 3 4 invoice & confirmation (SMS) 5 5 66 seller customer bank seller bank 2) invoice (SMS) Buyer 4) invoice & confirmation (S MS) Advantages 1. More accessible since almost everybody has access to a mobile-phone. 2. Cheaper because based on SMS. 3. Easier because involves use of mobile phones. 4. Can be used for small and medium size payments. 5. Can have any float period (time between purchase payment). 6. Safer because more limited in funds, does not include sharing sensitive info, and relies on the local-PIN to transmit. Also, if somebody wants to use somebody elses mobile-phone number, then the owner of the phone would be notified. E-Commerce Systems The type of online payment system used is heavily influenced by the financial infrastructure. U.S.: In 2002, Credit Cards accounted for 80% of online payments. While only 50% of consumers outside the US use credit cards for online commerce. Europe and Asia: Cash on Delivery (COD) & Bank Transfers are relied more on as a method of online payment. Underdeveloped: In many parts of the world, including the Middle East, financial infrastructure is still underdeveloped. Credit Cards are not accessible, nor affordable for the majority of people. Digital Cash systems or prepaid cards are available but still costly because of the needed infrastructure to support them. server Web server SMS server (with a wireless capability) mobile network Customer Order SMS invoice Internet Middle- ware DB server SMS server Order Internet Middle - SMS invoice Mobile Network Customer Internet 6) confirmation (S MS) 5) request (internet) mobile-service provider 3) confirmation (SMS) 1) product ID (internet) 5) funds (internet) Middle-ware New Components Web-Server DataBase 4) invoice 1) confirmation 3) invoice 2) confirmation SMS-server with wireless capability Disadvantages 1. Mobile-phone must be physically available. 2. Spam is more likely to occur because fake merchants would attempt to fool a customer by sending fake invoices to them. Security The information exchanged includes: mobile phone number, invoice, and receipt. Confidentiality (hiding of info): can be met by an SSL encryption algorithm. Integrity (keeping the info unchanged): Also by SSL. Non-repudiation (authenticated proof of destination arrival): by the presence of a third party in the transaction, namely the mobile operator.