Reinhard Zuba: by 2014 three billion people will be able to
transact electronically by mobile technology
A driver pays for parking at Vienna’s
With a single touch, an NFC phone becomes a train
The telecoms industry has a history of hype overtaking the
reality when it comes to new services, a trap that m-payment
has been in danger of falling into.
A recent study by Juniper Research predicted that the total
value of mobile payments for digital and physical goods, money
transfers and near field communications transactions will reach
$670 billion by 2015, up from $240 billion this year. This
growth will be driven by the rapid adoption of mobile
ticketing, NFC contactless payments, physical goods purchases
and money transfers as people in both developed and developing
countries use their devices for everyday transactions.
In contrast to other global markets, mobile payments and
m-commerce services are already well established and very
popular in Austria, which has gained a reputation as the most
advanced m-payment market in the world.
Telekom Austria launched the first m-commerce application
worldwide in 1999, allowing the purchase of train tickets via
text message. Later on, the service was expanded to municipal
transportation in six of the largest Austrian cities, resulting
in more than half a million mobile tickets sold in 2010.
Despite claims to the contrary, m-payment services have so far
failed to reach a breakthrough at the global level due to
diverging interests across industries, especially between
financial institutions and mobile providers.
We’ve seen recently that credit card giant Visa
has been making waves with its acquisition of Fundamo and the
extension of its agreement with Monetise, yet this is simply
the latest in a number of strategic moves within this market.
Where Austria succeeded was in understanding early on that the
adoption of m-payment services was dependent on building close
relationships between operators and mobile payment providers.
In fact, it’s 10 years ago this year since
Mobilkom Austria — now integrated into the main
business, called A1 — acquired a stake in Paybox
Solutions and began initiating partnerships and merchant
In Austria, mobile payment started with the Paybox service,
which was automatically available for Mobilkom Austria
customers. Customers of other operators could also use the
services but had to register with Paybox.
All postpaid subscribers could pay for parking and public
transport, pay at several thousand vending machines and in
cabs, shop online, top-up any prepaid phone and play the
The popularity was such that, by 2008, Austria’s
four leading Austrian mobile operators — Mobilkom
Austria, T-Mobile, One, now integrated into Orange, and
Tele.ring — had signed a cooperation agreement to open
the Paybox standard to all of their combined subscriber base,
reaching a customer base of more than four million.
The greatest challenge faced by mobile operators and their
payment partners was to develop a payment scheme that is on the
one hand easy to handle and safe for the customers and on the
other hand technically possible, high performing and secure for
the business partners.
Another key challenge is how to involve financial institutions
in m-payment initiatives, an issue that Telekom Austria
sidestepped by becoming the first mobile network provider
worldwide to be awarded a bank licence in 2002. Subsequently
the A1 bank was established, guaranteeing secure mobile
payment, supporting both pre-paid and post-paid transactions.
Both the interoperable Paybox platform and the A1 bank
supported the wide range of m-commerce applications available
in Austria and have contributed to driving the market. Since
the launch of the interoperable m-payment platform, the number
of m-payment users has doubled to roughly 400,000 and the
number of transactions has increased even more significantly.
One of the most successful m-payment solutions of recent years
in Austria is m-parking, a service known as Handy Parken.
Launched in 2003, it sold more than 14 million parking permits
in 2010. This figure is set to rise to over 16.5 million in
In Vienna, where the original pilot scheme began, about 40% of
all permits are bought via Handy Parken, and the scheme has
been extended to nine other cities. Handy Parken transactions
account for 60% of transaction volume for A1’s
m-commerce portfolio, which also includes transport tickets,
road toll charges, lottery tickets, vending machines and event
This success is based on the simplicity and customer
convenience of the service, which is delivered in partnership
with Siemens. Customers send a text message to the service
number, stating the length of the desired parking time. A
receipt is sent via SMS.
Ten minutes before the ticket expires, the driver is reminded
by SMS. The parking voucher can then be extended, once again by
SMS. Payment can be made securely through Paybox or credit card
top-up. A Handy Parken smartphone app has been downloaded more
than 100,000 times.
In April this year, Handy Parken expanded to include the Apcoa
car parks at Schönbrunn Palace and Graz airport, also
working via Paybox. The customer presses the button for a
ticket when entering the car park. Payment is then made by
texting a code printed on the ticket to a telephone number.
Just a few seconds later a text message confirms the payment
process and enables the car to exit the garage.
The Juniper report also found that some 20 countries are
expected to launch NFC services in the next 18 months,
resulting in transactions approaching $50 billion worldwide by
2014. This increasing adoption of NFC looks set to give fresh
momentum to m-commerce applications as it offers a wide range
of possible applications from transport ticketing, loyalty
cards, access cards and micro m-payment solutions.
Austria has tested a wide range of NFC-based applications,
including peer-to-peer information terminals, vending machines,
cafeterias and access to buildings such as lecture halls, labs
As part of the trial, A1 monitored user acceptance of the
services in everyday life. A user experience study will provide
the basis for application developments, product improvements
In September 2007, A1 launched a package of NFC services in
Austria in co-operation with NXP Semiconductors, Nokia, rail
company ÖBB and Vienna’s public transport
service Wiener Linien. With a single touch, a mobile phone can
be transformed into a railway ticket, tram ticket, electronic
parking ticket, lottery ticket and much more.
This led to the development of the world’s first
mobile chip-based end-to-end NFC solution for mobile ticketing,
which was piloted by A1 and ÖBB, with support from Nokia,
in January 2009.
Tickets are no longer delivered via SMS, but directly loaded
onto the NFC element of the mobile phone. From there, the
ticket details can be validated directly by the
conductor’s NFC phone; again with a single touch.
For the customers, this has the advantage that tickets can be
checked by the conductor even while the customer is making a
call or when the mobile phone is switched off. Nearly 2,000 NFC
mobile phone tickets were ordered from the pilot customers from
January to March 2009.
In March 2008, the marketing council of the Austrian city of
Wels, together with local merchants, began a customer retention
programme, whereby merchants can buy parking fees for their
customers. All shops participating in this retention programme
were equipped with a NFC-capable mobile phone, the Nokia 6131,
and NFC tags. Merchants can buy a 30-minute parking permit,
enabling their customers to enjoy their shopping without
interruption. This project demonstrates how this innovative
technology can be deployed for concrete, customer-oriented
solutions with a high added-value.
For mobile payment, the reality may have finally caught up with
the hype. More and more operators are gaining experience and
competitive advantage due to the increasing numbers of
m-commerce and m-payment initiatives being developed and
deployed across most market sectors.
By 2013, Gartner predicts that mobile phones will overtake PCs
as the most common web access device worldwide; and by 2014
over three billion of the world’s adult population
will be able to transact electronically via mobile or internet
technology. Mobile is here to stay, and growing ever more
pervasive in today’s society, and mobile payment
has ceased to be the skeleton in the industry’s
Reinhard Zuba is CMO of Telekom Austria Group