M-Payment Solutions and M-Commerce Fraud Management

Mobile security and payment are central to m-commerce. The shift from physical to virtual payments has brought enormous benefits to consumers and merchants. For consumers it means ease of use. For mobile operators, mobile payment presents a unique opportunity to consolidate their central role in the m-commerce value chain. Financial organizations view mobile payment and mobile banking as a way of providing added convenience to their customers along with an opportunity to reduce their operating costs. The chapter starts by giving a general introduction to m-payment by providing an overview of the m-payment value chain, lifecycle and characteristics. In the second section, we will review competing mobile payment solutions that found in the market place. The third section will review different types of mobile frauds in the m-commerce environment and solutions to prevent such frauds. INTRODUCTION Mobile commerce (m-commerce) grows dramatically. The global m-commerce market is expected to be worth a staggering US$200 billion by 2004 (Durlacher Research; More Magic Software, 2000). M-commerce can be defined as any electronic transaction or information interaction conducted using a mobile device and mobile networks, e.g., wireless or switched public network, which leads to transfer of real or perceived value in exchange for information, services or goods (MobileInfo.com). M-commerce involves mpayment, which is defined as the process of two parties exchanging financial value using a mobile device in return for goods or services. A mobile device is a wireless communication tool, including mobile phones, PDAs, wireless tablets, and mobile computers. (Mobile Payment Forum, 2002) Due to the widespread use of mobile phones today, a number of payment schemes have emerged which allows the payment of services/goods from these mobile devices. In the following sections an overall view of the m-payment value chain, the m-payment life cycle and the m-payment characteristics is given. Also the operational issues are analyzed, which are critical to the adoption level of a payment system. The operational issues or characteristics will help in the unambiguous identification of the payment solutions. M-Payment Value Chain Many different actors can be involved in mobile payment process (Mobile Payment Forum, 2002;McKitterick & Dowling, n.d). For example, there is a consumer who owns the mobile device and is willing to pay for a service or product. The consumer initializes