Simpay, the attempted industry-wide standard for mobile payment being developed by a consortium of European operators, has folded.
The initiative was wound up following the withdrawal of T-Mobile, which was apparently due to the company’s concerns about the way the system interacted with handsets, networks and other payment systems.
A statement from Simpay before the plug was pulled said, “Following the decision of one of its founding Members not to launch Simpay for the foreseeable future, the decision was made today at a General Meeting of Simpay not to pursue its activity on a pan-European scale as originally planned.
Instead, Simpay’s operations will be scaled back with immediate effect. Member operators will be able to exploit Simpay’s intellectual property rights at a national level, although international interoperability remains a goal. The members will make known their individual plans in due course.
All of the operators involved in Simpay continue to share the vision of the enormous potential of the mobile commerce market and the importance of providing a robust and straightforward payment facility to content providers.”
Alterative payment providers queued up to deliver their obituaries.
Ashley Ward, CEO of Upaid, an Anglo-French mobile payment specialist, said he thought Simpay’s clopsure would actually help mobile commerce.
“The demise of Simpay was inevitable because it was the wrong solution to the wrong problem.
“Simpay would never work because it was barely different to the current operator billing model for third party mobile content and we knew that no person accountable to shareholders could continue to sign-off such huge investments for an unproven solution with such a long-term return.
“The mobile content providers we talk to desperately need a payment solution that gets away from operator reverse billing to the mobile phone account. Content providers currently lose around half of their potential revenue to the operator, just for the pleasure of being billed through them, which is entirely unnecessary. These companies cannot afford this, which has so far limited the range of goods and services that can be accessed via the mobile phone.
“Most potential content providers have been holding off on decisions about how to operate to see if Simpay would work, but it was never going to produce an economically different solution and was an opportunity missed from the outset. Upaid offers an operator-independent way for content providers to sell goods and services over mobile phones at a fraction of the cost that operators charge.
“Now that Simpay has folded we are experiencing an influx of enquiries and I believe that its demise will unleash the huge forecasted growth in mobile content which will benefit everyone involved.”
Another m-commerce company, Qpass, also had plenty to say.
“Simpay made a valiant effort to try to plug the gap caused by pSMS as a standalone payment channel in Europe. Simpay put together a next-generation payment system that transcended the issues pSMS faces, such as having no audit trail, having high drop-off rates which some speculate to be as high as 5 to 10 per cent, and an inability to track sales of mobile content so that content providers are left in the dark as to the success of their sales,” said Claudia Poepperl, director of marketing for Qpass.
“With the closure of Simpay, pSMS will continue being the most adapted, mass-market, payment method on mobile handsets in Europe regardless of its limitations as a payment channel. pSMS enjoys popularity rates that generated more than 1.4 billion Euro in revenue in 2004 for mobile operators, but it allows damaging levels of revenue leakage, fraud and inflexibility with pricing schemes.
“The space left by Simpay will likely not be filled with a successor or replacement system. Rather Qpass calls to the market to move forward by optimising the current and existing payment systems that are in place. The insufficiencies of pSMS can be dramatically reduced by implementing a sophisticated transaction management solution.
“Using pSMS as a standalone payment channel is the equivalent of a Formula One team not tuning up their racing cars for optimal performance,” said Poepperl. “The underlying technology under the bonnet needs fine tuning with the latest technologies if the team stands a chance of winning against the competition. Qpass is dedicated to ensuring mobile operators can bank-roll on popularity of pSMS whilst securing themselves from the risk of error, fraud, revenue leakage and customer dissatisfaction.”