Pay by Phone in the UK - Research Paper Example

Information Technology: Pay-by-Phone in the UK Table of Contents Executive Summary ………………………………………………………………....2 Introduction ………………………………………………………………………....2 Findings and Analysis ……………………………………………………………….4 A Survey of Preferences……………………………………………………..4 The Case of Telstra Mobile ………………………………………………....5 The Case of Mobilianz ……………………………………………………...5 Why Pay by Mobile? ………………………………………………………..6 Pay by Phone in the UK ………………………………………………….....7 The Future of Mobile Payments ………………………………………….....8 Conclusions ………………………………………………………………………....9 References …………………………………………………………………………..10 Executive Summary The mobile phone has come a long way. From just being an instrument to relay messages between two parties, the mobile phone is now used for so many purposes like gaming, taking photos, internet surfing and most recently, payment of parking fees. Pay-by-Phone is a new way to pay for parking, because instead of using the coin slots for parking metres, a driver only needs to send an SMS to pay for fees, as well as for any additional parking time. With this kind of technology, payment through mobile can pave a way to even better cashless transactions in the future due to its portable nature and user-friendly methods. Introduction The telephone, as defined by the Merriam-Webster dictionary, is an instrument for reproducing sounds at a distance. In the process sound is converted into electrical impulses for transmission. According to Anderson and Johannesson (2005), the telephone evolved rapidly due to its instant nature. The predecessor of the telephone, the telegraph is hardly present or even heard of today, but the telephone has persisted for more than a hundred years. This is due to the fact that the absence of intermediaries made the two parties easily exchange information in real time without much delay, just by talking on both ends of the line as compared to the telegraph. For the later part of the 20th century, the telephone has come a long way. From originally being connected in a wired network, the originally analogue system of transmitting signals in telephone lines became digital, to accommodate more customers. Also, since the data being received and sent are rather bulky, high-speed transmission is important, which needs the digitizing of data being exchanged (Lee, 1997: 3-4). Due to the perceived promise of the telephone technology in accommodating and innovating its functions to fit the continuously improving information technology system, it became one of the key elements in the present era of communication. The mobile phone’s origins can be traced from the mobile two-way radio, which were used in fire trucks and police cars. Soon, mobile telephony for the general public grew, and eventually a system of using transmitters that covered small patches of land that could hand off transmissions as a user moves around became the forerunner of cellular technology (Anderson & Johannesson, 2005:24). Eventually, the use of analogue frequency modulation became replaced by digital telephony, by the introduction of GSM, or Global System for Mobile communications. There are numerous technologies along the line of these types of mobile telecommunication which contribute to the development of the present types of telephones. It is predicted that by the year 2017, every wireless technology that was being developed around 2007-2011 would become quite common, and would be taken for granted later on, such as mobile e-mail, Wi-Fi systems, and Digital Broadcasting (Saunders, 2007:182-183). At the moment, everything that can be supported by the mobile phone is being explored, such as mobile internet, television, bill payments, and the like. In the future, these and more will be the norm, thus the need to exchange even more data in the network, such as personal information, photos, among others, as part of a community-built database (Cortizo et al. 2011). The main objective of the paper is to explore the functions of one of the developments related to the telephone technology which is the Pay-by-Phone technology in the UK. With the introduction of Pay-by-Phone in the U.K. for ease of payment, currently being assessed is the use of mobile phones as electronic wallets, the possibilities they pose for customers, and their impact. The aim of the study is achieved through the presentation of the different technologies related to the Pay-by-Phone innovation and the reaction of the public. Findings and Analysis A Survey of Preferences One of the studies related to the development of the payment through phone had been determined in the study of the conducted in Greece. In 2008, a survey was done to find out the preferences of a representative age group that frequently use mobile phones and have the potential to adopt newer services, such as mobile payments (Androulidakis et al., 2008). Using gender as the demographic variable in order to identify some major distinctions between mobile users, the survey churned out remarkable results. Of the population surveyed, those with the ages between eighteen and twenty-four, there were 34.17 percent male and 65.83 percent female. There was also the trend of men preferring to buy “digital goods” such as mp3, videos and other digital content. Women, on the other hand preferred buying “hard goods”, anything that is non-digital in nature, like movie tickets and the like. The said trend is essential in the determination of the segregation of the population with regards to product choices which is important in the study of the reaction to a particular technology (Androulidakis et al., 2008). With regards to the payment options, there was a strong preference for payment through subscription in both genders, which comprised around 70.86 percent of the total surveyed population, as opposed to pay-per-view and pay-per-unit, 14.03 percent and 15.11 percent respectively). Pay per view (PPV) and pay per unit (PPU) could make unpredictable costs due to a possible excessive usage of services. Such possibility is considered to contribute to the unstableness of the said payment technologies. Meanwhile, payment through subscription seems a better choice for more respondents, since there is just a flat rate for all the services the customers could ever use. The preference for the said payment option is considered due to the simplicity of charging. It is a common notion that when it comes to expenses, consumers choose the set-ups that are less complicated (Androulidakis et al., 2008). The Case of Telstra Mobile Another study which is focused on similar technology had been tested in another region. Much like the Pay by Phone trend in payment for parking fees, payment of parking by mobile was test-driven in Melbourne, Australia around 2002. Telstra Mobile and the city councils of Bronte in Sydney and CBD commenced a three-month m-commerce parking meter trial in September 2002 (Ding & Unnithan, 2004). Motorists in Sydney and Melbourne were able to pay for some parking spaces either through their mobile phones or coin slot machines. Payment by phone requires dialling of a 1-900 number listed on the meter, confirmation of transaction via voice messaging, and the parking meter would then display the expiry time and fee. Unfortunately the additional 55 cents that should be paid to use the mobile service was considered as a significant disadvantage. This is due to the fact that the drivers would rather use coins for their parking, since the 55 cents they would have used to activate the service would be used for an additional parking time. Also, not only Telstra but other mobile phone users could not use the mobile parking system setup (Ding & Unnithan, 2004). The Case of Mobilianz Inc. There is also a similar technology in Asia. As early as 2002, payment through mobile phones has been introduced in South Korea, through the firm Mobilianz Inc. (Lee & Lee, 2003). Many South Koreans did not have enough trust in payment through internet transactions. In addition, not many people in general use credit cards, and if some do, their credit cards do not permit payment of small purchases. Due to the said reasons, payment through mobile phones became very convenient: buying flowers; sending cards; and even movie tickets were easily paid by mobile. Another ease for the customers is that whatever they bought by phone will just be added to their monthly phone bill, which is a lot easier compared to using both credit card and phone, and paying for separate bills (Lee & Lee, 2003). Such convenience had been appreciated by the people of the said country, thus it had been successful. The critical success of the mobile commerce or m-commerce in South Korea can be attributed to the availability of high-speed internet provided for by the government, the saturated ownership and usage of low-cost/high-capacity mobile phones throughout the nation, and the payment system that connects the use of internet and the mobile phone. This well-developed IT infrastructure was and is the first of its kind anywhere, coupled with the number of mobile phone users in South Korea (about 99% of adults) made Mobilianz very successful in generating revenue in just two years (Lee & Lee, 2003). Based on the case of the Mobilianz in South Korea, it can be considered that a well functioning information and communication technology infrastructure is an important prerequisite to the success of the pay through phone system. Why Pay by Mobile? In a study by Nguyen and Rong in 2007, the current status of electronic payment by mobile phone had been assessed. In addition, additional security features for the integrity of payments were established. It was found out that by having the transactions via SMS confirmations, having the information about the merchant posted in public, as well as the use of the already existing service providers could prevent the chance of hacking, tampering and hindering different forms of transactions. Also, since there is no need to maintain a server because the servers are provided for by the network providers, the merchants were free from paying maintenance checks. The only requirement was the retrieval of the information needed by using secure SMS. Pay-by-Phone in the UK With the advent of mobile payment of parking, customers need not to rush in to the parking lot to extend time by churning in coins in the slot machine. Also, the need to rush both in parking and fumbling for coins will be forgotten. These are the main objectives of the Pay-by-Phone technology in the UK. The Pay-by-Phone, formerly known as Verrus promised ease of financial transaction through the use of telecommunication. The company was founded ten years ago, and is currently the leading provider of mobile payments in the parking industry in North America (PayByPhone, 2011). Many motorists find that the service provided by Pay-by-Phone quite easy and user-friendly. With SMS-reminder service and the option of adding longer parking time without running back to their vehicles makes it easier and much more convenient for parking customers. Aside from the customers’ satisfaction, parking operators also benefit from using PayByPhone because of the reduced costs associated with the expensive operation of pay and display machines, as well as the increase in revenue (PayByPhone, 2011). The Future of Mobile Payments Payments are usually done either by cash or by card. Cash is very convenient is anyone can just pay and get the item or service being bought instantly. The hassles of using cash is that it can tend to be bulky, especially with coins, the possibility of losing some, if not all, and not having enough at all. Using a credit card is also convenient, provided that the owner pays the bills on time and not maxing out too much. The downside is that aside from having to pay the bill separately, which adds up to additional effort in payment, cards are also subject to frauds, such as thieves that duplicate the information embedded in the magnetic strip. Using the mobile phone to pay for just about everything can also mean that the transactions would be quick, easy and relatively more secure. It’s like paying through cards, but with less hassle of taking out either a wad of money, or flashing a card then swiping it and signing copies of the receipt. Also, since people normally bring their phones a lot more usual than their cards or cash, the customers will have a more convenient way to pay, even the smallest amount, anytime, anywhere. Conclusions From being a humble messenger between two parties, the telephone has evolved rapidly in the past three decades. Not just for messaging anymore, the mobile phone can do much more like taking pictures, surfing the internet, and now paying bills as well as parking meters with just one click. This kind of technology can go a long way because of the lessened hassles of either bringing paper bills or coins or having a credit card that isn’t always accepted in some stores. Also, there is an added security in payment since the service carriers would be hard to corrupt and hack. Having both a phone and an electronic wallet can be very handy to some people who forget everything but their mobile phones. And, purchases can always be added to the next phone bill, which saves time and effort rather than paying a separate bill for credit cards. With the rapid expansion and adaptation of technologies today, it is likely that payment through mobile phones shall give the way to the future of monetary transactions. References Anderson, J. & Johannesson, R. 2005. Understanding information transmission. 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