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Mobile payments to star in Vodafone, Microsoft deal

It will probably take years for this prophecy to be proven - or exposed as wrong - but here it is: the deal between Microsoft and Vodafone for "mobile web services" is going to focus on a scheme to create the world's mobile banker.

The White Paper was revealed at this week's Professional Developers Conference in LA. It has been described as "a roadmap with a stark lack of detail" by some, as "not as bad as we feared" by others.

Analysts have focused, by and large, on the fact that this is going to be standards based - as if this, automatically, made it a good thing.

The reason it's going to be standards based is plain, and straightforward. Microsoft has plans to dominate the next generation of credit authorisations - over wireless.

Vodafone has tried this itself, on its own, with its m-pay service.

Very simple: you walk into a store, select your purchase, and say "Here's my m-pay details!" and the storekeeper enters them into the till. Instantly, you get an SMS asking if you want to authorise the payment. You reply with your PIN. Ching! and the sale is done.

It hasn't been a success, and Vodafone has acknowledged as much by joining the Mobile Payments Services Association with three other mobile giants - T-Mobile, Orange and Telefonica - when it was set up in February.

Similar attempts to globalise mobile payments have been tried by the Mobey Forum, which is banker-driven. Bo Harald, Chairman of Mobey Forum, said: "The role of the Forum is to promote mobile financial service based on open architecture solutions for mass-market use."

Mobey Forum has the bankers; what it doesn't have, is the SIM card. The world's mobile phone companies have those.

Microsoft has been focused very closely, for some time now, on the power of digital rights management. It is working to ensure that every Windows machine is registered to a known user; that every media player is licence-aware, and that it can track the identities and the payment status of everybody who is watching movies or listening to music via the Web. It even has, with the latest version of Office 2003, a way of preventing people from copying and forwarding emails to non-authorised recipients. And finally, there's location.

All the world's mobile phone users know where you are. Software to do this is getting better; adding GPS to mobile phones and PDAs comes next.

Today's wireless data networks, using GPRS, are pretty poor. One reason that m-pay wasn't an overnight success was simply that SMS texts get lost. Mostly, they come right back across the network; but when it matters, they can get out of sequence, or delayed - sometimes for hours. The GPRS network, by comparison, is even less reliable.

But that won't always be the case. Inside five years, there will be highly reliable, very fast packet-switched networks in virtually every place there is a GSM network today. Purchases will routinely be made over the air - not just of trivia like ring tones, but bookings (train tickets, restaurants) and actual merchandise, from music tracks to motor cars.

Whoever owns the standard over which this mobile payment network is run, will in effect, be the Internet's banker. And Microsoft is using its alliance with Vodafone, as with its work with IBM in WS-Security, to develop a strategy that will put it in a uniquely powerful position.

It has to follow industry standards, because Microsoft's plan depends on everybody else using it. It will be XML based, and it will be W3C based, and it will do everything that everybody wants. It will even be secure, believe it or not.

If it doesn't happen, it will only be because someone else spots the danger, and gets there first.