Business 2.0 has an article where they got a couple of VCs to say what they would like to put their money into in near future. A very nice read.Only one out of the 11 ideas caught my attention and got me excited.
Fraudproof credit card authorization via cell phones and PDAsThe mobile phone market penetration is relatively low for US, standing at a good 66% as of 2003 where it's virtually universal in most of Europe, weathier parts of Asia and Australia. This idea would definitely work better in Asia.
Credit card fraud is more rampant than ever, and consumers aren't the only ones feeling the pain. Last year banks and merchants lost more than $2 billion to fraud. Most of that could be eliminated if they offered two-part authentication with credit and debit purchases -- something akin to using a SecureID code as well as a password to access e-mail. Occhipinti thinks the cell phone, packaged with the right software, presents an ideal solution. Imagine getting a text message on your phone from a merchant, prompting you for a password or code to approve the $100 purchase you just made on your home PC or at the mall. It's an extra step, but one that most consumers would be happy to take to safeguard their privacy. More important, Occhipinti says, big banks would pay dearly to be able to offer the service. "It's a killer app no one's touched yet," Occhipinti says, "but the technology's within reach."
To pull this off, you can do without additional software on the mobile phone, and develop services on top of the SMS platform. Given the server end has the extra burden of securing an potentially insecure SMS communication, it brings usability up by not having the user do any installation on their part. Since the idea is to add an extra layer of security over an overwise insecured credit card, any help against fraut will be a welcome addition at a small cost.
Once you do this, there is no real way to stop the banks doing this on their own, maybe teaming up with the telecom guys, thereby screwing the whole business model that is until now dependent entirely on helping make transactions more secured.
You can't, until you build a brand of recognition, so much so that the banks have to team up with you because everyone and his mother has heard of and trust your name. At that point you're selling the technology, as well as your image of a trusted SMS provider.
How do you build a recognition? This is one way: You first provide valuable services at norminal costs, services that may have nothing to do with money transaction. You can build a search-engine-over-SMS (SEOS perhaps?), you can provide flight time information, Movie times, traffic information on demand. People trust google because they provide information on demand without bothering them with too much advertisement. After a while you'll gather a community of users that 1) you know are real people and not just one person making multiple accounts because of Caller-ID, and 2) got used to your service at this point and would be willing to try a featuer that involves bill payment.
Anyway, I'm just thinking out loud.
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