4G Secure My Mobile Secure ID

4G Secure My Mobile Secure ID

-

English
47 Pages
Read
Download
Downloading requires you to have access to the YouScribe library
Learn all about the services we offer

Description

Touitou David Report 2012 SUMMARY INTRODUCTION ................................................................................................... 2 ARC 1 - THE MARKET OF MOBILE PAYMENT SOLUTIONS ...................... 3 I/ Marketing Mix ................................................................................................ 4 II/ Competitors Analysis ......... 12 III/ 4G Secure Products and Services Supply ................................ 24 ARC 2 - THE 4G SECURE SYSTEM ........................................................ 29 I/ Magic Square and Sequence Diagram ........................... 29 II/ Risks and Limits regarding 4G Secure Solutions .............................. 32 III/ Relevance regarding 4G Secure Security System Solution .... 37 CONCLUSION ..................................................................................................... 42 ANNEXES .......................................................................................................... 44 WEBOGRAPHY................................................................................................... 46 1 INTRODUCTION owadays we can find them everywhere on Earth, they became a part of us, they always are by our sides and we seldom get them out of our minds.

Subjects

Informations

Published by
Published 06 June 2013
Reads 23
Language English
Document size 2 MB
Report a problem











Touitou David

Report 2012





SUMMARY


INTRODUCTION ................................................................................................... 2


ARC 1 - THE MARKET OF MOBILE PAYMENT SOLUTIONS ...................... 3
I/ Marketing Mix ................................................................................................ 4
II/ Competitors Analysis ......... 12
III/ 4G Secure Products and Services Supply ................................ 24

ARC 2 - THE 4G SECURE SYSTEM ........................................................ 29
I/ Magic Square and Sequence Diagram ........................... 29
II/ Risks and Limits regarding 4G Secure Solutions .............................. 32
III/ Relevance regarding 4G Secure Security System Solution .... 37


CONCLUSION ..................................................................................................... 42

ANNEXES .......................................................................................................... 44

WEBOGRAPHY................................................................................................... 46

1
INTRODUCTION

owadays we can find them everywhere on Earth, they became a part of us, they
always are by our sides and we seldom get them out of our minds. Computers, N laptops, smartphones, tablets and all other connected devices, just have invaded our
world to make it change significantly without any turning back possibility.
The fact is that even if all these communication devices have revolutionized and improved not
only our way to communicate with each other but also our purchasing habits, they still have
brought with them a powerful plague that we call the “digital crime”.
Indeed, it’s now known by most people that several reports were made regarding viruses, data
theft, identity theft, bank money theft and much more… We also know that today, the worst
digital crime lies in Internet sales, where online scam can be found everywhere.
Moreover, we can forget about our antivirus or our personal security software which won’t
bring any help regarding online purchase security due to the fact that they are now completely
outdated in this area.
Of course, many companies and other organizations tried to correct these issues encountered
on the Internet, but few of them managed to find out a proper way to secure what we call
“sensitive data” such as the user first name and last name, credit card numbers and other
variables concerning the person who purchase goods and services online. One of the issues
lies in the fact that today; nobody has control on the dataflow that reside on the Web. So the
key is to develop a perfectly safe way to secure the consumer’s data so that his sensitive
information will be protected before, during and after his transaction with an ordinary
merchant. We can’t rely on old techniques anymore, such as Id-Tronic or regular
Authentication (login + password) which aren’t a hundred percent reliable.
Another issue encountered is that whether the customer isn’t educated concerning ways to
avoid online scam, he certainly will fall down soon or later in a trap set by some hackers that
won’t hesitate for a second to impersonate him so they can steal his data and/or his money.
There is a double problem, on the one hand we have to find out how to secure sensitive data
transferred on the Internet and on the other hand we have to make the consumer feel safe so
we can convince him and gain his trust.

Fortunately, some firms recently managed to offer credible ways to secure monetary
transaction, just like 4G Secure did since two years now.
Indeed, the company which has recently merged with the SCCP Group (a payment service
firm) offers services that stand in three points; the strong identification, the enrolment and the
strong authentication that we will study during this argumentation.

We can now wonder how the mobile payment market goes today and how it will be
developed in the near future but also how the company 4G Secure will make the difference on
this same market compared to its competitors.



2 INTRODUCTION
To answerer these questions, we shall begin by analyzing the market trends regarding the
mobile payment solutions, but also by enumerating the various influential actors that can be
found within it, without forgetting to describe the offer proposed by 4G Secure.
Then we will deepen our study by demonstrating how the 4G secure system works, by
showing where its limits take place and finally by arguing on the relevance regarding its offer.


ARC 1 - THE MARKET OF MOBILE PAYMENT SOLUTIONS
e have noticed that recently, there is a large amount of activity in the market around
mobile payments. Indeed, we saw many pilots and many live applications to be W launched all over the world during last past years.
However we have to highlight the fact that this trend wasn’t true a decade ago. Indeed, for
those who remember, there were predictions of aggressive growths in mobile payments, but in
the end this growth did not materialize as expected. Mobile payments have in fact largely
remained an undelivered promise for more than ten years.
For instance, we know that in 2002 some market experts forecast that by 2006 55 billion €
would be processed through mobile payments. However, in 2006 the same sources predicted
the market to reach only 10 billion € by 2010.
Another example, in 2009, one source predicted that in 2013 an absurd 800 billion $ would be
transacted by phone while another source predicted a much more conservative 1.5 billion $
1for the United States alone .
The reality is that even if mobile payments services have a great potential for the near future,
they are merely starting to emerge and to make them known by smartphones users around the
world. So far, this market size and growth do not match at all with predictions that were made
around it.
2
Figure 1: Some old predictions regarding the Mobile Payment Market

1 http://www.frost.com
2 https://www.nacha.org

ARC 1 - THE MARKET OF MOBILE PAYMENT SOLUTIONS
3
While the attraction of mobile payments is widely recognized and getting bigger and bigger
today, there are some key development variables that we must analyze with attention. These
variables suggest caution regarding the current trend of excitement around mobile payments.
We will discuss about them in more detail during this argumentation but first we will analyze
the attraction of mobile payments for the major stakeholders.

I/ Marketing Mix

his is undeniable; the attraction of mobile payments for all
market actors and all users is causing significant investments T in the creation of mobile payment products and services. This
is why more and more offers have been and are being proposed on
the market since some years now.
We have to point out the fact that even if the definition of mobile payment begins to make
sense for users and the other market actors, there still remain many ways in the market to
define what a mobile payment is and almost as many ways of categorizing it.
Indeed, some industry professionals seem to be unable to come to an agreement on the exact
definition of a mobile payment. Most of time there is confusion between such things as
mobile payments, mobile banking, and the use of the mobile phone to simply order goods or
receive delivery (while paying by other means). This is this lack of coherent and mutually
shared definition of mobile payment that causing a limited cooperation and standardization
between the actors of this market. In this context, it really seems difficult to envisage the rapid
and consistent growth of this business without educating and teaching to smartphones users
about this possibility to pay by mobile phone.
In fact, the prevalent thinking in the market today seems to be that just because mobile phones
are ubiquitous and interactive (almost every people have a smartphones today) they are
therefore a natural choice for the mobile payment functionality. In the end, the issue is that
this kind of reasoning may prove to be false. Indeed, all things that “are supposed to be
logical” for most people aren’t necessarily adopted by the majority.
To clarify what is a mobile payment, we could give the following definition: this way of
buying consist in a payment (a transfer of funds in return for a good or a service) where the
mobile phone is involved in the initiation and the confirmation of the payment. In this context,
the location of the consumer (also called the player) is not important (he may or may not be
“mobile” or “on the move” or at a point of sale, it just doesn’t matter). We also have to note
that mobile payment services include mobile parking, mobile ticketing (or couponing) and
mobile remittance.

Now, regarding mobile payment pilots and initiatives, we notice
that they are numerous and in motion all over the world.
Moreover, it should be noted that different geographical areas do
not have the same levels of progress and maturity in the various
applications of mobile payments (which is obvious since countries
do not have the same resources). For instance several African
countries make use of mobile payments for peer to peer remittance
and to reach the un-banked ones.

ARC 1 - THE MARKET OF MOBILE PAYMENT SOLUTIONS
I/ MARKETING MIX 4
As expected, Asian countries such as Japan or South Korea are well advanced in the use of
smartphones for point of sale payments and we noticed that mobile devices in these
geographies are slowly morphing into single devices with multiple payment applications.
Regarding Europe, it is actively experimenting with point of sale NFC payments but also the
use of QR Code for purchasing in stores.

The preview of the mobile payment market being set, we will now analyze this market using
the Marketing Mix method. Thanks to this technique, we will be able to describe the products,
the prices, the places and the promotion regarding this specific market. The aim of using this
method is to get a global comprehension regarding the market and its variables. It will allow
us to have different points of view concerning a same topic, so that we can be aware of all
there is to know about it.
THE PRODUCTS:

Regarding the products, we noticed that we can find four primary mobile payments
methods today:
 The premium SMS/USSD based transactional payments
 The direct Mobile Billing
 The mobile web payments (3G+)
 The contactless mobile payment NFC (Near Field Communication)

The first mobile payment method, the premium SMS/USSD based
transactional payments, is one of the oldest way to pay using a mobile
phone. This method can now be classified as obsolete (using SMS and
USSD through GSM and WAP channel) but some people still use this way
to pay online from their mobile.
The procedure for using this system is very simple; all you have to do is to send a payment
request via an SMS or an USSD (which is a kind of SMS used to communicate with the
service provider’s computer. Example: the Orange Telecom provider’s consumers, have to
type #123# on their cell phones to know their remaining talk-time) to a short code (special
telephone number) and a premium charge is applied to their phone bill or their online wallet.
Then, the merchant involved in the transaction is informed of the payment success and can
next release the goods to his consumer.
As no any trusted delivery address has been given with this method, these goods are most
likely to be digital. The merchant replying using a MMS (Multimedia Messaging Service) to
deliver the purchased music, ringtones, wallpapers, games etc.
This method has been popular in Asia and Europe few years ago but is now being overtaken
by other mobile payment methods such as mobile web payments and Direct Mobile Billing
for several reasons.


ARC 1 - THE MARKET OF MOBILE PAYMENT SOLUTIONS
I/ MARKETING MIX 5
Indeed this solution only provides:
- Poor reliability (the transactional payments can easily fail as messages get lost)
- Slow speed (it can take hours for a merchant to get receipt of payment but today
consumers do not want to be kept waiting more than a few seconds)
- Poor security (the message is plaintext)
- High costs (short codes are expensive)

The second mobile payment method, the direct mobile billing, is very
popular in Asia. The consumer uses the mobile billing option during
checkout at an e-commerce site (such as an online gaming site for instance),
to make a payment. After two-factor authentication (authentication which
requires the presentation of two factors: "something the user knows" and
"something the user has") involving a PIN (Personal Identification Number)
and an OTP (One-Time-Password), the consumer's mobile account is
charged for the purchase. This is a truly interesting payment method
because it does not require the use of credit cards or pre-registration at an online payment
solution such as PayPal. This method just allows the consumer to bypass both banks and
credit card companies. We noticed that this type of mobile payment method provides the
following benefits:
- An average security (two-factor authentication and a risk management engine prevents
fraud)
- Convenience for the consumer (no pre-registration and no new mobile software is
required)
- Ease (it is just another option during the checkout process)
- Velocity (most transactions are completed in less than 10 seconds)

The third mobile payment method, the mobile web payment, is one of
the most experienced ways of buying through mobile phones in Europe
so far. To make a purchase, the consumer uses web pages displayed or
additional applications downloaded and installed on his smartphone
(using WAP/3G+ channel).This familiar web payment model gives a
number of benefits such as:
- The follow-on sales (the mobile web payment can redirect the consumer to a store or
to other goods that he may like. The URL (Uniform Resource Locator) can be
bookmarked to allow re-visiting or sharing with friends).
- A high customer satisfaction (the payment is quick and predictable)
- The ease of use (familiar set of online payment pages)
To do his payment, the player will have the possibility to choose which means he will use; He
can use his credit card number (just like on a classic destock), a pre-registration account (such
as PayPal), a direct operator billing (which requires integration with the operator to get a
direct connection to its billing platform) or an Online Wallet (just like Amazon Payment).

ARC 1 - THE MARKET OF MOBILE PAYMENT SOLUTIONS
I/ MARKETING MIX 6
We also noticed that recently, it became possible to pay through mobile phone by scanning a
QR Code (Quick Response Code).
The QR Code has been a successful marketing tool in Asia and Europe, we
can see it almost everywhere today (on advertising panels, on goods
packaging, on street arts and even on clothes). It is highly used for classic
promotion campaign and for street marketing event. Using this means
represents an easy way to inject info into mobile phone. This will ease
communication creation such visit a website or copy useful text.

Finally, we will now talk about the last mobile web payment possibility that we know today.
This technique is called the “Mobile payment service provider model” and it consists in
collaboration between the different key actors on the market for the development of mobile
payment solutions.
In this context, we can view a mobile payment solution as based on three key inputs; the first
one being the mobile phone, the second one being the bank account, and the third one being a
payment system provider (trusted third party). We noticed that each of these inputs is kind of
controlled by a key actor. The mobile network operators and mobile phone manufacturers
have control over the design and distribution of mobile phones. Banks have control over their
consumers’ accounts. And finally, payment systems (like Visa or Mastercard for instance)
have control over large acceptation networks.
Even if these key actors have some control over the three key inputs of a mobile phone
payment solution, we argue that they can be bypassed. We could say to begin that, a solution
can be developed without the cooperation of the mobile network operators and mobile phone
manufacturers, as the payment application can be downloaded through an App store, for
instance. Another example is the payment solution developed by Square, which has been
launched by the former CEO (Chief Executive Officer) of Twitter. This solution is based on a
device that plugs into the mobile headphone jack, whence its complete independence from the
mobile network operators or manufacturers.
Secondly, the mobile payment solution could be based on the payment card of the consumers,
in which case the provider does not need the cooperation of the bank to get access to the
consumer’s bank account. For instance, the Obopay solution allows consumers to add money
to their Obopay Online Wallet with their debit or credit cards, and then send money to
relatives or merchants through their mobile.
Thirdly, a mobile payment service provider could develop a solution by its own, if it decides
to target a niche market. For instance, the provider could limit the acceptation of its payment
solution to a few affiliated merchants (like Obopay, which targets mainly Peer to Peer
transfers but proposes merchants to affiliate to the system at no fee).

The table below (on the next page) gives some examples for five possible combinations
regarding the collaboration between the different key actors on the market for the
development of mobile payment solutions:





ARC 1 - THE MARKET OF MOBILE PAYMENT SOLUTIONS
I/ MARKETING MIX 7

COOPERATION WITH…
Mobile network Payment system Key Actors Bank
operator provider
Light model No No No
This corresponds to the Obopay service in the U.S, where consumers
Example use their payment cards to add money on their Online Waller and can
use it on any mobile phone.
Mobile-centric No Yes No
model
This model corresponds to the initial mobile prepaid solution
Example
proposed for the first time in Japan.
Yes No Yes Bank-centric model
In this model, banks develop a mass market mobile payment solution
without any cooperation with the mobile network operator. The bank
Example and the payment system provider are the only actors which are
present here like in the 4G Secure case.
Yes Yes No Partial integration
model
This model corresponds to a payment solution where the incumbent
mobile operator acquires a bank and restricts its mobile payment Example
solution to a niche market.
Yes Yes Yes Full integration
model
This model corresponds to different potential or existing situations
like a vertical integration over the value chain (one example is the
Example
Japan mobile operator NTT DoCoMo, which acquired a bank and a
large retailer).

As you can see, these models involve different degrees and forms of cooperation. Benefits of
cooperation are: the cost-sharing and the advantage of complementarities between the
different actors. For instance, banks have gained a great experience in operating mass-market
payment systems, which might be essential for a wide adoption of a mobile payment solution.
Banks also have experience in risk and fraud management that other players, like the mobile
network operators, do not have. In contrast, the mobile network operators have strong
partnerships with mobile phone manufacturers which might help to develop payment-enabled
mobile handsets.



ARC 1 - THE MARKET OF MOBILE PAYMENT SOLUTIONS
I/ MARKETING MIX 8
This collaboration gives several benefits to the consumer too, such as:
- A high level of security (if using a model where banks are involved)
- The follow-on sales (the online wallet contains all the data regarding your
transactions).
- A high customer satisfaction (the consumer feel safe about his data with this method)
- Ease and velocity (the payment is quick and easy)

The fourth and last mobile payment method, the contactless NFC
(Near Field Communication), is mostly designed to make
purchases in physical stores or transportation services (like the
Navigo Pass). Nonetheless, this technology has interested the
mobile payment actors for some years, due to its velocity and ease
of use. To practice this method, the consumer will have to possess
a special mobile phone (equipped with a smartcard) and pass his or
her phone near a reader module. It’s important to know that most
transactions do not require authentication. Nevertheless, some transactions require an
authentication using a PIN, before transaction is completed. Regarding the payment, it just
could be deducted from a bank account or a pre-paid account or charged to a mobile (on the
telecommunication provider bill). We also have to highlight the fact that, this method of
mobile payment has not yet democratized due to its lack of supporting infrastructure (only a
very few stores propose this means of payment), but also complex ecosystem of stakeholders
(only a few smartphones are equipped with the NFC technology), and standards (changing for
NFC technology in every stores would represent a huge cost). Indeed, the market for NFC
enabled phones is still in an early stage of development. However, we noticed that this type of
mobile payment method provides the following benefits:
- An average security (the authentication limits the risk of leaks)
- Convenience for the consumer (no credit card, no pre-registration and no new mobile
software is required)
- Ease (the consumer just has to pass his phone near a reader module)
- Velocity (it is done in a second)









ARC 1 - THE MARKET OF MOBILE PAYMENT SOLUTIONS
I/ MARKETING MIX 9