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M-Payments: a contentious issue for RIM

The storage and management of sensitive payment data has become a serious issue creating conflict between telecommunications carriers and RIM, the maker of the Blackberry smartphone.

The data in question is the user's payment credentials - the data held in the magnetic strip of a credit card – and the question is where it should be stored on a handset. The carriers believe this data should be stored in the SIM card, while RIM says it should be in a secure area of the phone.

If the data is stored in the SIM card, it can be transferred between devices and the customer is related mainly to the operator, while in RIM's vision the user is tied to the gadget itself. The large mobile phone operators have noted that they will only sell phones if the credentials information is stored in the SIM card. However, it is clear that technology vendors with closed platforms will be keen to build the m-payments security and identity features into the handset.

This conflict reflects the fact that there is still a significant portion of grey area throughout the entire m-commerce industry, and a key priority for actors in the sector is to own the main customer relationship.

Some commentators - in particular Nokia who are investing heavily in the mobile payments industry in India - believe that building and encouraging an open platform is the key to long term success and preventing instances of ‘lock in’ that inhibits innovation. However, it is questionable whether such a strategy is appropriate for the potentially highly-lucrative m-payments market.