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Simpay - The Wrong Solution for the Wrong Problem
Source : Smart Card News

Smart Card News (31 July 2005)

Simpay's plans to launch the first pan European mobile phone payment platform collapsed this month. T-Mobile, Orange, Telefónica Móviles and Vodafone originally launched Simpav in June 2003. Its main objective was to create an open and interoperable framework for mobile payments in Europe. The service was primarily designed to facilitate small purchases up to between 10 and 12 Euros. The consortium hoped to have the system up and running in at least 20 countries by 2004 starting with Spain and Belgium, but was hit by a series of delays.

A statement posted on Simpay's website cited "Following the decision of one of its founding Members not to launch Simpay for the foreseeable future, the decision was 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 operability 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." The announcement did not specify which member it meant but a range of sources mention T-Mobile. T-Mobile recently withdrew from the Simpay alliance apparently citing major concerns about the way the system interacted with handsets, networks and other payment systems. A spokesman for T-Mobile said that they decided to leave Simpav in favour of payment systems they had developed themselves. A Vodafone spokesman said that the withdrawal of T-Mobile "makes it difficult for the group" but added that there is "valuable intellectual property" that can still be used.

Michelle De Lussanet, an analyst at Forrester, predicted Simpav would never have worked in the first place by saying "Simpay’s pan-European mobile payment scheme was doomed from the start." There have been growing concerns for some time that some of the mobile network operators were not quite happy about the progress of Simpay and the change of the CEO in February, when Tim Jones stepped down, was an interesting signal. The new chief executive of Simpay, David Taylor, said "I can’t say what the future holds, but for now Simpav is closing."

Ashley Ward, CEO of Upaid, an Anglo-French mobile payment provider, has this view: "The demise of Simpay was inevitable because it was the wrong solution to the wrong problem. Simpay would never work because a was hardy different to the current operator billing model for third partv 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 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 bring billed through them, which as entirely necessary. These companies cannot afford this, winch 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."

Martin Gutberlet, an analyst with Gartner said about the situation "This is not the end of mobile commerce. There will be national solutions to cover what Simpay was trying to do." David Everett, CEO of the Smart Card Group, summed up by pointing out that "it is easy to hammer nails into a coffin." However he points out that there is still a large number of companies working on mobile commerce and the failure of Simpay is more about achieving cooperation amongst the major mobile operators than disputes over the need for a payment infrastructure." He further went on to say that the Smart Card Group has developed a new payments mechanism using a secure Multi Media Card.

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