Cell phone users make easy purchases

Payment via mobile phones, the latest technological leap in Estonia that began Nov. 20, will not likely shake the popularity of debit cards but still might catch on for making minor purchases, organizers of the new system said.

Launched by Hansabank and Uhispank, Estonia's two largest financial institutions, in cooperation with Bank Card Center, provider of electronic transactions, the mobile system is unique throughout the entire world, said system organizers.

After a test period that ran from June to September, the payment system was finally put into motion this month, allowing cell-phone users to make a range of purchases at authorized shops and restaurants.

Payments via mobile phone do not require the use of a new bank account. Instead, they utilize the regular demand account of the mobile-phone owner. Activization takes several hours and can be done through the online banking Websites of Hansabank and Uhispank.

Tea Trahov, director of the development and administration division of Hansabank, said the system essentially provides for the use of a mobile as a regular debit card, i.e. it identifies a person and grants access to his or her existing bank account.

To pay with a mobile phone, one must dial a combination of the 4-digit call center number, the shop's code and the sum in kroons and cents, all of which must be separated by asterisks.

Then, after the connection is established, the client must enter a security code to confirm the transaction. The system checks if there is enough money on the account tied to this particular cell phone number.

After about 20 seconds the shop assistant receives a text message confirming the transaction.

The transaction is free for the customer other than the approximate half-minute call to the call center.

Users of any Estonian mobile communication operator who have a bank account in Hansabank or Eesti Uhispank can use the novel system.

According to Trahov, the mobile payment system is good for retailers, individual private entrepreneurs, taxis, barbershops and other small businesses which have poor Internet connection or bad phone lines that often cannot maintain a card payment system.

Businesses have to pay the regular commission fee to the bank as they would for a card payment system.

Presently there are about 28 businesses with 130 sale points, most of which are in Tallinn, where the new system is available, according to bank officials.

However, finding out where these places are might be challenging. It required a person at Eesti Uhispank's information desk five minutes to find out that the bank does not have a list of the places where you can pay by mobile phone.

The full list of the businesses participating in the new system is available at the Bank Card Center and generally includes Tallinn's trendy cafes and bars, a couple of taxi companies, drugstores and some small shops in Tallinn and Tartu. A sticker "Maksa mobiiliga!" (Pay via mobile) marks the spots.

Jaan Tamm, director of Eesti Uhispank's e-technology and operations division, predicts over 1,000 shops in the system within one year.

"Local people are very open-minded for technological innovations. Over one-half of Estonia's population has mobile phones, and that will help the mobile payment system grow," said Tamm.

Wellington pub, one of Tallinn's central bars, does not have the sticker, but the bartender confirmed the pub accepts mobile phone payments and that several people a day use their cell phones to pay for lunch.

Aksel Alas, chair of ETX taxi company that joined the mobile payment project already in the test period, said the taxi drivers were satisfied with the system. "Both clients and drivers are satisfied. Paying via mobile is more convenient than a card payment," said Alas.

"However the whole thing is relatively new and not everyone [of our clients] knows that he can now pay with a cell phone," said Alas.