A few months ago, Ignacio Mas and I wrote a CGAP Focus Note entitled Going Cashless at the Point of Sale: Hits and Misses in Developed Countries. Our aim was to analyze the history of electronic money schemes in developed countries, more specifically in Europe and Asia. We thought it would prove a useful exercise as CGAP works towards sustainable branchless banking models in developing countries. As expected, our research revealed several important insights.

In the paper, we discuss three broad approaches, and in each case we look at two providers who met different degrees of acceptance in the marketplace. Already on this blog, I have highlighted the two cases of smartcard-based electronic-cash providers: Mondex in the UK and Octopus in Hong Kong; as well as mobile operators facilitating existing payment instruments: Mobipay in Spain and Moneta in Korea.  Now I turn to the final approach, mobile operator-centric payment schemes. The first example of this is Simpay in Europe.

Simpay was launched in February 2003 by a consortium of the four leading European mobile operators: Orange, Vodafone, T-Mobile, and Telefonica Moviles. Its mission was to develop and operate a pan-European payments system for mobile phones, focused on micropayments (less than 10 euros). Despite the company’s tagline—“pay for stuff with your mobile”—the system was also designed to allow purchases from PCs connected to the Internet.

Under the Simpay scheme, mobile purchases are debited from the mobile user’s account—whether prepaid or postpaid—with his operator. The operator thus authenticates, provides the mobile transacting channel to, and bills the user. Transactions with merchants (retailers and content providers) are aggregated through merchant acquirers—essentially intermediaries who would drive adoption of the technical platform by individual merchants and who would channel payments between Simpay and individual merchants.

The initial plan was to offer the service in 20 countries by 2004, but many delays ensued. Simpay was hampered by strategic and operational difficulties. Despite the common vision at the beginning, the sponsors were unable to agree on what types of mobile payments Simpay would offer. It appears that the complexity of the task had been considerably underestimated. The solution was deemed by many to be out of proportion for the very low volumes of paid mobile services at the time, beyond ringtones and logos.

Divergences between the founding members led T-Mobile to withdraw from Simpay in June 2005, and Simpay’s activities were discontinued shortly thereafter. Simpay was never launched.

Read more details about the Simpay experiment here.