Text messaging used to make car payments in pilot project

Computerworld - Car payments can be initiated using text messaging from a mobile phone under a pilot project announced today by Western Union Co. and Consumer Portfolio Services Inc.

Once a customer sets up the service, an alert is sent to the user's phone that a car payment is due. The user types a "yes" response as a text message to authorize transfer of the payment from a credit or debit card, the companies said. A confirmation text message is sent seconds later to the user.

A division of security vendor VeriSign Inc. worked with Western Union and CPS to set up the test program, which is expected to last about three months, said René Link, vice president of corporate strategy at VeriSign's messaging and mobile media division. VeriSign works with about 700 carriers globally to ensure reliable transmission of SMS and multimedia messages.

VeriSign has been involved in the mobile banking infrastructure and is starting to work with setting up mobile payment infrastructures, he said. "People are getting more and more accustomed to doing what they have been doing online, but now on mobile," he said. "Networks and devices and security have gotten better, and there are 3 billion mobile handsets across the globe. We see a great opportunity in this space."

Using SMS, or text messages, means that Western Union and CPS can avoid sending customers to a Web site from a mobile device or an interactive voice response system, which are costly alternatives for billing companies and can be cumbersome to set up, Link said. SMS is also ubiquitous across mobile devices, he noted.

Steve Kramer, vice president of electronic payments at Western Union, said the VeriSign approach bypasses many security problems with mobile banking and bill payment, since no account information is passed over the wireless network. All the credit or debit card information is already previously registered by the user.

Users also can decline to make payments when the alert is sent. "We think this will work well especially in this economy, as people prioritize bills and want to decide when to pay," Kramer said. Part of the purpose of the pilot is see if the mobile payment approach with CPS leads to more on-time payments. Western Union annually transfers more than $400 million in bill payments, but they are made electronically from desktops or in cash, he said.