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Wednesday, 24 January, 2001, 18:21 GMT
Sealing online bills on the move
10 note BBC
Notes? Pah, that's so old fashioned.
By BBC News Online internet reporter Mark Ward

Shoppers on the net or on the move will soon be able to use their mobile phones to electronically sign the bills they run up in cyberspace.

European payment processing giant Europay is teaming up with Finnish mobile telephone specialist Sonera Smart Trust to make it safer to spend money online.

The pair are collaborating on ways to embed digital signatures into a mobile phone that will prove the person paying for goods and services has actually ordered them.

Trials of the technology are expected soon, but it will face significant competition from rival mobile phone payment systems already in service.

Fraud fears

Online shopping is gradually growing in popularity, but both shoppers and shopkeepers have reservations about using credit cards online. Consumers fear that their card numbers and personal information will be stolen and misused, and merchants are worried that they will have to pick up the costs of any disputed transactions.

"It is an open secret that there are big problems with online payments," said Timo Laaksonen of Sonera Smart Trust.

Recent studies have shown that although credit card purchases on the net account for only a small fraction of all card purchases, they do account for almost a half of all the disputed transactions.

Many banks, technology firms and credit card companies are working on ways to reduce these disputes and reduce the risks to all concerned.

Some, such as American Express, are proposing to use disposable cards only valid for a single transaction. Others, such as Earthport, have developed a system that deducts payments from a small pool of cash taken from a bank account.

Pay by text

Now, European payment processing company Europay is working with Finnish mobile phone specialist Sonera Smart Trust on a mobile payment system that racks up payments on a credit card even though the number of the card is never revealed during a transaction.

The system can be used by anyone with a mobile phone and works by sending an SMS text message to the phone of the person ordering goods and services via TV, landline, mobile phone or the internet.

The text message summarises the transaction and asks the owner of the phone to confirm it using their PIN number.

The reply to this message contains not only the PIN but a digital signature that has been embedded in the phone's SIM card, the small chip that holds information about the phone and its owner. "The digital signature gives proof that you are involved with the transaction," said Olivier Denis of Europay International.

Technology trials

Once the signature has been received and confirmed, the payment is authorised and added on to the relevant credit card bill.

Although not well known, Europay is Europe's largest credit card payment processor. It is behind the Eurocard-Mastercard and Maestro and Eurocheque brands that can be found on 260 million cards in Europe.

The organisation has 9,000 member banks and is now talking to many of them about using the payment system. Mr Denis said many of them were interested in using the technology but it would take a few months for trials to be conducted.

The system also has the backing of the Global Mobile Commerce Interoperability Group that is the electronic payment talking shop for phone firms, wireless gadget makers, mobile phone technology companies, credit card companies and financial institutions.

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