The Friday Interview: Donal McGuinness, Alphyra mPayments

4 Feb 2005127 Views

Last year was eventful for Donal McGuinness (pictured). In August, Itsmobile, a mobile payments company he co-founded with Kieran McCrea, became part of the Alphyra group of companies and changed its name to Alphyra mPayments. Then in November, the Irish Internet Association named him as one of the net visionaries of 2004 for his contribution to the mobile internet.

Metamorphosing from a start-up to a division of a larger company has brought many changes. “The biggest change is the reach that Alphyra has given us, particularly across Europe,” observes McGuinness. “It operates in almost every country across Europe and has relationships with almost every cellular operator in Europe. We therefore have a great opportunity to use the Alphyra channel to promote our technology in these countries and it’s already starting to happen.”

MPark, the company’s system for paying on-street parking using a mobile phone has proved to be a big hit in Dublin and Edinburgh. However, since becoming part of Alphyra, the system has expanded further. “In February we will be rolling out mPark in three German cities and we already have it up and running in Antwerp in Belgium and in two sites in the US,” he explains.

Being part of Alphyra was certainly a catalyst for that expansion, he says. “It gives you credibility. It means you have local people in the local country that speak the language. People like to deal with local people, particularly in some countries, and we have that now. This is the beginning of m-commerce of what it was meant to be. Certainly we are seeing huge demand and the networks are ready.”

Of course people have been saying the same thing about e-commerce for years. So is e-commerce really taking off? McGuiness believes it is, although it is possible we will be asking the same question in a few years time. “There is such a long way that e-commerce can go. One of the big changes in e-commerce has been the advent of the airline websites such as Aerlingus.com.” The other driving force for e-commerce is the migration of government services online or e-government. “To be able to renew your car tax online now is a big plus,” he says. “Everybody dreads the motor tax offices. There is support from the right circles to make e-commerce and e-government a success.”

However, many pundits have said that e-commerce will not really take off until the question of micropayments are addressed. It’s one thing to go into a shop and pay €2 for a newspaper, but how much should you pay to download an article? A few cent? But it would cost several euros just to process the transaction.

“The development of micropayment systems is critical to the success of e-commerce in general and m-commerce in particular,” says McGuineess. “If you think of macropayments, the solution has been around for years. But when you get into low-value payments generally the solution offered is a prepaid wallet that in my view is not good enough because people don’t like to prepay. It’s critical that there is another method developed that will not involve prepayment into a stored value account.”

The problem, he says, is not just technological. There are a lot of solutions out there, many of them from Irish companies. However many of the restrictions, he says, arise from the banking world. Charges are simply too high relative to the actual charge. “Somebody needs to clear the transaction at the end of the day and that’s the bottleneck.”

One solution would be to spread the risk of the transaction. “If someone is going to sit in the middle of the micropayments chain, they need to do more than pass through the transaction,” says McGuinness. “They need to take responsibility for the risk. If the intermediary takes on the risk, the bank charges are lower. In effect you are not processing the transaction but are reselling it. People can then make enough money to survive. But everybody is afraid of risk particularly when you are dealing with prepaid users. They don’t have credit cards; you may not even know their identity.”

Developments over the next 10 years will undoubtedly bring changes in the way people use the internet. “Will it even exist in its current form 10 years from now?” asks McGuinness, rhetorically. “With broadband being in every home in 10 years time, the biggest changes will be the multimedia elements. I wouldn’t like to be in the DVD rental business in 10 years because those people will have to move their businesses online. You can see it already. CDs and DVDs will disappear. You can see it already with iTunes and you will see the same thing for movies.”

For the moment, however, McGuinness’ favourite websites are those dedicated to travel. “I only view websites by how useful they are to me. So in that regard the most useful websites I find are the travel websites such as Aerlingus.com. Also I travel a lot overland in Europe so I would use the route planners a lot.”

As a frequent traveller, he considers Wi-Fi to be one of the most important technological breakthroughs of recent times. “I was in Paris in November and I came across a coffee shop offering free Wi-Fi access. I sat down, ordered a coffee and checked my email. It’s just such a great thing. In Ireland there are hotspots pretty much everywhere you go and when voice-over internet protocol starts to converge with the handset manufacturers we will start to see some exciting things happen.”

Not surprisingly, his favourite piece of technology is his mobile phone. “I don’t have a full multimedia handset,” he confesses. “But what I want to get is the new BlackBerry.”

By David Stewart

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