Although the implementation details of different mobile payment systems vary,
their structure is quite similar (Kruger, 2001, Figure 1). First, a customer and a
merchant agree on a transaction and either one of them notifies the mobile payment
service provider. The mobile payment service provider confirms the transaction to
customer via his/her mobile phone and then asks the customer for approval. Once
approved, the provider administers the transaction and stores the appropriate fund
transfer instructions. Periodically, these payment instructions are cleared, resulting
in net payment instructions. Settlement can take place in a variety of ways. On the
merchant’s side, it is usually the bank account which is updated. On the customer’s
side, one of a prepaid account, a bank account or a credit card account is updated.
Also, in many payment systems a monthly bill is sent, similar to the monthly phone
bill.