What type of payment system ?

The most popular is still paper/coin currency. First principle to create an alternative standard of payment requires, however, that buyers and sellers agree to use it and accept it. Buyers will not use a payments instrument if they cannot use it to pay where they shop, and sellers will not go to the trouble of accepting a payment instrument if few shoppers want to pay with it. A new way of paying must solve this fundamental chicken and egg problem.

The mobile solution ?

Well there are more than 500 million people on this planet with a mobile phone connected to a network somewhere on this planet. Mobile phone comes with an identifier and commonly known as a number in order to call someone. Sounds familiar ? Well, since almost everyone has a number could this be the ‘currency’ to pay. In short in order to pay someone even a merchant, one only need to have a number. Simple ? Yes and across all networks, any where on roaming.

Convince merchants and consumers to change when what they currently rely on (ie cash/cheques/credit cards) works very well ?

Mobile payment is more secure than cash, portable as cash (you need to bring your mobile phone like a wallet) and is universal (ie you need not worry about foreign exchange) and works even when there is no banks around (ie on a deserted island or in the outback). No specialist equipment is needed for merchants (ie no reader just ordinary mobile phone). Cheaper as it only involves a fee by the telcos (no bank fees, you don’t even need a bank account). Consider two payment alternatives for a merchant with $100,000,000 of annual transactions. One promises a 50% reduction in payment costs—1%—for 20 percent of transactions that would take place using that method. That leads to a cost savings of .01 x $20,000,000 or $200,000. The other promises a 3% increase in overall sales as a result of attracting new shoppers. That increases sales by $3,000,000 and leads to increased profits of $870,000 on average. In fact, it would only take a .7 percent increase in sales to beat the method that offers a 50% reduction in payment costs. The profit margin on additional sales averages 29 percent for large merchants that account for two thirds of all payment transaction by volume. The average cost of accepting a payment method is in the range of 1-2 percent of the transaction size. (See Daniel D. Garcia Swartz, Robert W. Hahn, and Anne Layne Farrar, “The Move Toward a Cashless Society: A Closer Look at Payment Instrument Economics,” Review of Network Economics 5 (2) (2006).)  Many countries—from China, India to Mexico—with low penetration of point of sale equipment and other investments in payment systems (no economic decisions concerning adopting new technology) would be best suited for jumping into mobile payment.


Our Solution – Smartscape.

The world's first true INTER telco to telco (t2t) mobile payment solutions. Most known mobile solutions have a tendency to connect to a banking institution to route the payment or by employing agents (See M-pesa). Even some are collaborating with Western Union which also use agents. Since not every receipient is not with the same network, the overall effect is unsatisfactory as the receiver must have a bank account or access to ATM or find a Western Union shop (not forgetting the fees). Therefore the perfect solution is that the 'funds' get CREDIT (really credited) into their mobile accounts and use this as alternative currency in competition to VISA/AMEX etc.

To do this, one needs an intermediary linked to all participating telcos to authoritatively debit the payers' account and credit the payee's account (at the Telcos). At the end of the day (or some specific period) the participating Telcos then could setoff their differences and settle any balance through their own respective banks accounts. By this method, any telcos in any country can participate and at anytime by subscribing to said intermediary.

There is no additional software at client/server. Another advantage is that there is no 'deposit' (as with banks) because the funds are actually 'paid' by another Telco (after netting) through the financial system. For example, if customer A of Telco C wants to make payment to customer D of Telco Z and the amount is 50 and on the same day customer K of Telco Z wants to make payment to customer B of Telco C (amount is 50) then effectively there is no payment as both are netted out. Assuming there is a balance of 20, then Telco C will credit this to telco Z. In this way (in either cases above), the Telcos are not taking 'deposits' when the funds are not utilized nor cashed out by the recipient. In the case of one way transfer (from Telco C to Z only and not vice-versa), the net funds are held with a designated Bank under Telco Z (under trust account which is fully accountable). This are not 'revenue' to Telco Z but funds held on Trust. Click here for our proposition paper in PDF

Our invention is protected under US Patent 7461010. You can browse this by going to http://patft1.uspto.gov/netacgi/nph-Parser?patentnumber=7461010

Interested in our invention ? You can contact us at chris(at)smartscape(dot)com.

Join us as we are looking for contributors at linkedin.com http://www.linkedin.com/groups?gid=1998913