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Mobile phone companies: you're watching as your credibility is destroyed in payments...

People actually trust their mobile phone company more than they trust their banks. As a result, there's a real chance that mobile carriers may acquire some banking powers - for micro payments. That is, if they don't sell their credibility to the "gaming" gang.

The fact of the matter is that phone companies are playing with fire on "premium rate" systems. Once bitten, anybody caught in a premium rate scam will never trust the phone companies again - and that trust could be expensive, because money-laundering means that the telcos are onto a good thing. Potentially, they could take over credit card business for small amounts - say, fifty pounds and below.

Word is that the banks can't cope with those. It may be a simple urban myth, but it is widely believed that some retail chains actually sell things to wielders of plastic - and don't charge the deal to their card. It costs an estimated $2.50 world wide to put a single card transaction through the banking system - few transactions below ten pounds make the sort of profit that would justify doing it.

But the big chains reckon that if they insist on cash, they'll drive away customers. So they accept the card, and then just write off the cost of the coffee or sandwich or whatever it was.

Almost all of the cost of handling the small payment, is in regulatory reporting, designed to eliminate money laundering. There are ways around the problem, but it requires the consent of the Authorities. For example, you could, if you were a big chain, get permission from the card processing people, to consolidate a dozen or so transactions into a single one. Visa won't permit this; MasterCard will.

But if the deal goes through a payment authority which is not a bank, these regulations don't apply.

Trial payment systems using RFID are going on everywhere; and there are other tricks being developed. For example, a barcode can be read by a mobile phone's camera, a text sent to the processing authority, and a purchase confirmed. It all depends, however, on the fact that people trust their phone bills to be accurate and fair.

Now, take the case of 22-year-old Brett Rees, who started playing online "games" and dialling into premium rate numbers. He ran up a bill of £8,782.86 before the bill came in. Does anyone sympathise with a guy who's on benefit, getting into trouble gambling? Probably not! - but everybody will remember the incident.

Phone companies and mobile carriers make a fortune from similar scams. I'm sure they need the money! - but they are cooking the goose, golden eggs and all, from which their future revenue streams will depend.

Without the trust of the public, micropayments over mobile are, quite simply, dead.