An Auckland company is about to launch a mobile phone-based Eftpos payments technology it says is ideal for Internet users, direct marketers and paying bills.
Access to the Eftpos network has hitherto been limited to point-of-sale terminals, which are expensive and make use of specialised hardware security modules not suitable for use by individual consumers.
But in what is believed to be a world first, ePoc Systems has gained conditional Eftpos network access for its new $afePayment system, which uses the SIM cards in GSM phones for authentication. The system can be used for debit and credit transactions and also has a stored value, or "e-cash" capability.
ePOC Systems managing director Robert Daggar says all telecommunications companies will be invited to participate and he is awaiting a decision from "a major telecommunications company" before launching the new "universal Eftpos" system, at which point card issuing banks will have the choice of participating.
Daggar expects the "target segment" for the technology will initially be bill payment, with "obviously a migration to the Internet and to people making direct marketing purchases."
While the company is guarded about revealing proprietary details, Daggar will confirm that the SIM card does not "in the the technical sense" carry a digital signature "and there are reasons for that. Without getting too technical about it, we prefer to keep the issue of whether we do or don't use public key proprietary, but it's not a digital signature in the true sense of the word."
Daggar says the system is based on the idea of "creating a guaranteed settlement scheme, based on existing real-time authorisation processes to avoid any system changes."
Funding to prove the concept the new technology has come from Technology New Zealand (part of the Foundation for Research, Science and Technology). Daggar says that while the funding was modest and the process too bureaucratic, "the money we did receive from them was put to enormously beneficial use.
"We would hope that we would utilise them again and frankly without them I wonder if greenfields companies like ours have a prayer in New Zealand. It really is the only option for people like use who are hoping to get from vision-concept to proof of concept and creating a viable business model."
"We're very much a traditional start-up in that we haven't had an angel - we've funded it through the family and through the parent company and limped along to the point where we've got financial commitments which will enable us to go us. That's been a long, hard struggle, but I think what's kept us going is the knowledge that we do have a product that's unique in the marketplace - and hopefully the market will respond."
The parties that have been difficult so far are the card-issuing, says Daggar. He agrees that banks in Australia and New Zealand may be wary after having had their fingers burned on the doomed Mondex electronic cash system.
"Our solution is complex - but it won't be complex to the end user, and that's the important thing. It's been very difficult to get people of the right calibre in banks to understand how we do it. Hence our decision to go above them, because you can get lost in the detail and complexity without ever looking at the larger value-added proposition for the marketplace.
" I think the Mondex model, which I have watched with great interest, has always been flawed, and the money that has been thrown at it around the world has been staggering, when you consider [the banks'] inability hitherto to grasp what it is that we are providing."
From here, says Daggar, his company will finalise a proposal "with one or more SIM providers and then put a proposition to the card issuers which they will have a finite time to accept or decline. And based on that process I expect to go from our current mode to a launch mode."