From March, UK users will be able to use the m-pay bill service to buy items priced from £0.05 to £5 over the Internet or using a WAP phone. The service will charge the purchases to users' phone bills or deduct the charges from their prepaid accounts.
Vodafone contracted third-party software company iPin to develop the mobile-payment system and will use the company's e-Payment platform.
Payment is authorised by a user name and password for Internet purchases and a personal identification number for WAP purchases. When users make purchases on the Internet, they do not need to have their mobile phones with them, Vodafone said.
Vodafone competitor, British Telecommunications announced last month that it is working with iPin to develop its own eWallet for its BTopenworld Internet customers.
Vodafone also announced in January that it had begun trials of a global payment platform, or m-wallet service, over mobile devices in Germany and Italy as well as in the UK. The m-pay service is a "totally separate service from m-wallet" and Vodafone has no plans to offer the m-pay service outside the UK in the near future, Vodafone's Janine Young said.
Items and services that can be bought using the m-pay service include mobile-phone ring tones and icons, entertainment and financial information, online games, location services, music, news, sports information, ticket bookings, travel information and reservations and weather information, Vodafone said.
Vodafone has already signed up 50 companies to offer services and products through m-pay, including individual Web sites like iStrat, Young said. For example, through iStrat, Arsenal Football Club will let fans watch video clips of goals and match highlights over its Web site.
"Many customers are used to charging things like ring tones over SMS but SMS is limited on what you can charge. M-pay offers complete flexibility - for example you can buy both a ring tone and a music file coupled together," Young said.
Vodafone is aiming the service at customers who either don't have credit cards or who do not like using their credit cards for making small purchases, Young said. "We have no plans in the immediate future for offering products like CDs or books over m-pay, because quite frankly, credit cards are more suited for making those larger types of purchases and customers feel more comfortable using their credit cards in those cases," Young said.
When Vodafone launches its m-pay service in March it will have competition from Paybox.net, which began in Germany in May 2000 and is now operational in the UK, Austria, Spain and Sweden. In the UK, Paybox charges £14.99 per year for the service.
According to Paybox's Web site, it has 500,000 registered users and 6,500 merchants across Europe and has the advantage of not being tied to a particular network. One of its merchants is the Circus Restaurant and Bar in London.
All transactions are conducted over a secure GSM network so only a mobile-phone number is entered onto the Web when shopping online, the company said.
When Paybox members use their mobiles to pay for a product or service online or offline, they are contacted with an SMS message. Users then reply to the message with a PIN, which authorises the transaction, and the amount is debited from their bank accounts, Paybox said.