I digress and had to get back to my own blog and have posted a response to Jean-Philippe.

We obviously look at things from different viewpoints, and you make a good point,  yes, nothing is 'free', however the cost of mobile transactions have the potential to be significantly lower than present credit or debit card networks currently levied on merchants, lower than currently possible with a card based system. Jean's points raised are in quotes.

"If you want to offer payment services at merchants who are not your customers" - don't we simply open an account with their bank and settle to the merchant's account? You don't even need to open the account, just transfer the funds into it?

"If your goal is the widest acceptance of your payment means" - wouldn't we just make it easy for any merchant, regardless of where they bank, to sign up via the internet and accept any customer's mobile payments? Ditto for consumers.

"Either by charging a fee per transaction or through the mechanism of the interchange fee" - someone has to pay and I make the assumption that the merchant will pay something -  a flat fee of 20c per transaction instance?

"Starting the transaction with a mobile phone will certainly increase the security level from the very beginning of the transaction but I will still need some network to convey it" - the internet is readily available for this and far cheaper than the Eftpos network to maintain for instance. There are many options for transmission, depending on the nature of the merchant and their particular circumstances. Even a basic mobile phone will do for a low volume merchant to perform customer transactions, a shopping mall might benefit from a different approach, without precluding the hairdresser or restaurant from using a mobile. We're flexible. I also see the emerging P2P mobile communications (local calls, SMS, Chat, using your mobile - minus the Telco transmitter) playing more than a P2P role in malls. I always envisaged the shopping centre/mall or community market as the ideal communications node.

The mobile transaction provider is the aquirer.

Security - the message can be transmitted using the internet, however it is not vulnerable to hackers and will always reach it's destination. (alternatively transmission could be via a BTRadianz type network for instance).

'Global' is not an issue.

The basic requirements for a transaction to happen successfully are:

a. the consumer's bank needs to know the consumer wants to pay the merchant (or their bank).

b. the merchant's bank needs to know the consumer's bank is willing to pay them on behalf of the consumer to the benefit of the merchants account.

c. the merchant needs to know that payment has been agreed.

d. in some cases governments or other authorities need to know.

e. the banks involved must have an agreement in place which binds them to settle.

f. there must be a settlement process.

I don't see any real difficulties with a share of the over $42 billion America consumers paid in credit card interchange fees.  The banks agreement to settle and the means is their business, however there may be an opportunity to reduce the settlement time and costs for banks participating in the system. The transaction will at least have been completed to the point where everybody agrees what the process is and where they stand in the transaction. Settlement can be via the most competitive existing settlement systems might remain so, if they continue to be competitive.

Given the losses merchants experience on the internet with cards, there a bonus there right from the start with mobile transactions and the in-store fraud will be dramatically diminished also giving merchants an increase in profits.

The process may in fact be fundamentally similar, kind of like making pins by hand is similar to making them by machine, with the card system the former. The difference with ours is that it is possible to process more transactions with less fraud, without new infrastructure using less energy and at very significantly lower cost.
The transaction process may be simply the consumer agreeing to buy from the merchant, paying us (in an account we have with their bank), and we pay the merchant directly (from an account we have with the merchant's bank).

There'd be a bit of balancing to do in the background but wouldn't there be fewer settlements, perhaps like the CLS achieved. The consumer's mobile account may also have a stored value and eliminate some of the bank settlement transactions. Isn't this similar to the way Paypal etc works?

Could the present card based system realistically provide transaction processing for a total cost to the merchant of say 20c cents per transaction, and even viable micro-transactions?

Would faster access to cleared funds be attractive to merchants? (how long does a merchant wait for credit card funds to clear?)

A currency exchange and trading engine to 'sell' the consumer the recipient merchant's currency directly in the transaction is an option. The merchant may even want a foreign currency balance to pay a supplier, or even directly credit the local supplier at the moment of the sale transaction - Procter & Gamble might even like that with some merchants. Perhaps a few global consumer brand-conglomerates might see it as a way to improve the supply and payment chain especially when they find out about the other supply chain benefits mobile commerce will give them (with a little help from us). There is ultimately no real obstacle to merchants paying suppliers incrementally as they sell specific items when the goods being sold have been provided on credit terms by their supplier.  

It is also a way to potentially revolutionise the supply chain and possibly SOA for small to medium merchants. I could see IBM providing an outsourced inventory and payment management system which leaves the merchant free to do what they do best, sell goods, with fewer worries from consumer data security, fraud, or cashflow and inventory problems. No infrastructure required for merchants except a barcode scanner and a web interface.

Integration with an open consumer lending and borrowing platform in order to provide credit might see some banks participate less directly with consumer loans and credit ($148 billion less with Prosper in the market for instance). Banks could still bid for the loan like anyone else, but their customer might one day no longer maintain a credit card or personal loan directly with the bank. Consumers might just apply for the loan in real time by making the sellection at the point of sale. A bank might only have a slice of a loan along with a number of retail investors or even simply other consumers who have a stored 'mobile' balance. It almost sounds like socialist banking.

The mobile network and the internet are already there - 3.3 billion people can be given the choice to use mobile money without any new infrastructure and could eventually do away with the requirement of EFTPOS equipment altogether as we know it. All that would remain would be a scanner and screen. I wonder how much difference it could make to the mobile phone networks if all the money spent on that card and EFTPOS equipment was instead re-directed to investment in the mobile networks? Might we see a basic mobile service subsidised by the transaction processor, especially if those global brands were involved in the right way.

Governments have all sorts of reasons to want this eventuality even more. Mobilisation means massive savings for government, much more than the sum of all interchange fees, and some things that cards are unable to provide. It will be a prime enabler of future tax breaks.

It's merely the revolution in the capacity we have to communicate, 3.3 billion of us can communicate with each other in real time, but we didn't know how to establish sufficient trust and now that's solved, the way is open for real time benefits for everyone.

None of this is really different fundamentally to what is done now, except the that it is done more efficiently, and often that means fewer middlemen.