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Ofcom: PhonepayPlus to regulate PayForIt but not operator billing

Maybe later when it gets renamed OpCashRake

Designing a Defense for Mobile Applications

Payments made using the mobile PayForIt platform will henceforth be regulated by PhonepayPlus, but only a little bit, the governing regulator has decided.

Ofcom, who rules telecommunications regulation in the UK, has decided that mobile transactions don't need regulation, unless they're routed through third parties in which case they need a little regulation, unless they're using premium-rate numbers in which case they still need lots of regulation, all of which is to be provided by PhonepayPlus.

PhonepayPlus* already regulates premium-rate numbers, including those made surreptitiously by rogue applications, but now Ofcom will extend that responsibility to include payments made using third parties to span operators, such as the one run by PayForIt.

PayForIt was launched back in 2007 with the all-too-familiar promise of making all the other payment systesm redundant, but since then has happily coexisted with those options, all of which have been enjoying the huge growth in people paying for stuff from a mobile phone.

Imagine, for a moment, that one is planning to launch a music-download service in the UK (thanks to some sort of drug-induced optimism and an excess of capital) then there are four basic mechanisms one could use to collect the money for each track sold.

Credit cards are the most-obvious option, and work well for Amazon, but asking customers to type in their card details is a pain, and one can't sell to those who don't have cards, so other approaches have developed.

Premium-rate text is fantastically popular, used for everything from Big Brother voting to Dial A Psychic. The ease with which premium-rate numbers can be set up has driven enormous innovation, not least powering the ringtone-download market that operators thought was too trivial to bother with, and a wide variety of more-adult services. But that ease has also provided revenue for scammers and fraudsters, which is why that business has its own (Ofcom-appointed) regulator in the form of PayphonePlus.

Even easier than premium-rate is operating billing which simply adds the purchased goods to the customer's phone bill, or deducts it from the prepaid balance. Operator billing is wonderful for users and networks, but it's a pain to set up and one has to do deals with each of the operators separately, and not all of them are keen.

Which is the problem that PayForIt was designed to solve. PayForIt accredits processors who do the deals with the network operators, so one links to one of those processors in order to have payments billed to the customer through their operator. The processor provides cross-network compatibility and PayForIt provides some level of accountability, but not quite enough for Ofcom who've shifted regulation of PayForIt and its ilk into the PhonepayPlus camp.

Ofcom's statement (pdf, really dull) argues that as PayForIt merchants are audited to some extent a light regulation is all that's necessary, but it's up to PhonepayPlus to work out how to implement that.

Ofcom did consider asking PhonepayPlus to regulate operator billing too, but decided against given the existing complaints procedures available to those upset with their bills - but as operators expand their operations with collaborations (aka "trusted partners") it becomes harder to say what's being billed directly and what's going though a third party (and thus considered identical to PayForIt).

The mobile industry is universally keen to make it easier for us to spend money on our mobile phones, but Ofcom (and PhonepayPlus) walk a fine line ensuring that it's not too easy for them to bill us for stuff, and ensuring that we have someone to complain to when they do.®

*If you think that's a mouthful, the body used to be known as the "Independent Committee for the Supervision of Standards of the Telephone Information Services" or ICSTIS to its mates.

The smart choice: opportunity from uncertainty

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