Call to make mobile payments more transparent to consumers

Consumers should begin treating their cellphone bill like they do their credit card statement and check all deductions. With the increase in ease of mobile payments, especially via premium rate SMS subscription services, consumers should scrutinise their bills just as they would their credit card statements. If not they may be shocked by unexpected cellphone charges at the end of a month.

“Few consumers realise that their cellphone has become a payment mechanism. It is a communications device plus payment gateway but consumers treat their airtime with scant regard for how much money they may actually be spending on premium rate mobile services,” says Dr Pieter Streicher, managing director of BulkSMS.com, a global mobile messaging company.

According to Dr Streicher there is a worrying number of consumer complaints about mobile subscription services fielded by the Wireless Application Service Providers’ Association (WASPA) despite the industry’s best efforts to ensure wireless application service providers (WASPs) comply with industry regulations.

These complaints include incurring subscription billing without knowledge of subscribing, once off content downloads that initiate weekly charges, the difficulty in tracking down third party service providers and getting a refund from these companies, and the fact that networks cannot unsubscribe a consumer from a service. Complaints refer to joining mobile content clubs and also the downloading of mobile content such as ringtones, music, videos and information.

Many of these complaints are due to a lack of understanding about how premium SMS subscription services work as opposed to once-off downloads of content or information via SMS. Another reason is the lack of transparency in the presentation of cellphone bills.

“Of course tracking mobile billings if you are a contract subscriber is easier than if you are a pre-paid customer. Pre-paid customers have to request a statement from their network or service provider. But even then contract consumers need to have itemised billing before they can adequately check their monthly cellphone charges,” says Dr Streicher.

One place to start to ensure adequate consumer protection is to look at where mobile payments can learn from the credit card industry. The criteria for making a mobile payment via SMS should be made stricter and mobile service providers should be able to reverse a transaction electronically.

Currently, for mobile subscription services a vendor only needs a cellphone number to process a payment. Credit card payments, on the other hand, require the customer’s name, the credit card number and the CCV number before a third party can process a transaction. Furthermore, while a person under the age of eighteen years cannot apply for a credit card from a financial institution, parents are happy to provide their children with a cellphone. It becomes easy for children to run up large bills on mobile content.

Another major difference between mobile payments and the use of a credit card is that credit card companies can electronically reverse a transaction, this is called a chargeback. Mobile subscription services do not have this ability and a consumer has to wait on third party vendors, not the networks, to make good on an SMS subscription service billing complaint. In many cases, due to the small amount claimed this is given to the consumer as airtime and not a cash payout.

“Consumers should empower themselves about premium rate SMS services before engaging with them as well as check their billing for irregularities. Consumers should query any charges they are not sure about with their network or service provider. If there are unaccounted for billings then a consumer should act on these and, where necessary, lodge a complaint with WASPA. There is a need to ensure consumers feel that they have recourse when they feel they are wrongly billed,” says Dr Streicher.

In Dr Streicher’s view the mobile industry needs to pull its weight in offering consumers more protection when it comes to making mobile payments.

The mobile networks need to assess what is lacking in their billing processes compared to the credit card system. The two areas which would immediately improve mobile payment services are billing transparency and chargebacks. The former will make it easier to identify the service provider offering subscription services and the latter will enable service providers to offer refunds where appropriate,” says Dr Streicher.