Paybox is a payment system allowing you to buy goods and services using your mobile phone, currently operational in Germany, the UK, Austria, Spain, and Sweden.

You set up a direct debit agreement with the Paybox company. You also give Paybox your mobile phone number and agree a secret PIN with them. Then, when you want to buy something, for example from an online store -

  1. You select 'check-out' (or whatever) and choose the 'pay via Paybox' option.
  2. The online store asks for your mobile phone number.
  3. The online store contacts Paybox, and tells the Paybox system that they want to charge a certain sum of money to your phone number.
  4. The Paybox company immediately rings your phone, and asks for your PIN.
  5. You enter the correct PIN.
  6. The Paybox system debits the money from your bank account and credits it to the merchant.
  7. You receive an SMS message confirming the transaction.

The advantage is that you only have to give your bank details to the Paybox company, and don't need to 'risk' giving your credit card details to any other company.

However, in the UK (I can't speak for the other countries), this is hardly an advantage. In the UK, it is advisable to make all online transactions with a credit card, since our credit card laws are do great favours to the consumer, thanks to the Consumer Credit Act 1974. Essentially, the law says that the credit card company buys the goods, and then sells them to the credit card holder via a credit agreement. Thus, if the goods do not materialise, the consumer is entitled to claim the money back from the credit card company, even if the merchant has gone bankrupt.

I doubt the same safety mechanism would be applicable if you paid via Paybox, since it doesn't involve a credit agreement.

However, Paybox also suggest that you can use it to pay for goods where you'd usually use cash. For example, if you ordered a pizza, you could pay via Paybox, providing the Pizza delivery person had a mobile phone and their company had a Paybox account.

Also, the Paybox system does offer a significant amount of security. In order to buy something using your account, someone would need your mobile phone (specifically, your SIM card), and your PIN. Providing you're not so stupid as to store your PIN within your phone, this is pretty safe.

Update 2003-01-24:

Paybox have cancelled their UK operation. This from their website (my hardlinks):

The management will be taking over the shares from previous majority shareholder Deutsche Bank, and the paybox group will be fundamentally restructured.

The management will be taking over the shares from previous majority shareholder Deutsche Bank, and the paybox group will be fundamentally restructured.

The paybox end-customer service in UK will be discontinued immediately until further notice.

All outstanding payments and bills will be securely and reliably processed as normal.

We deeply regret this step, but see no possibility for a single mPayment provider to develop the industry alone in the current industry conditions, especially amidst the discord between the other important market players (banks and telecommunications companies). The necessary growth and profitability can only be reached with many active market players, which have so far failed to appear.

We are confident that "pay by mobile with paybox" will be taken up by a third party, such as a telecommunications, financial or retail company and that the existing system will be continue to be available. Paybox is focussing on the distribution to third parties (B2B), which is already a profitable business. In Austria this concept is already underway and an end-customer service will continue to be offered by mobilkom Austria. We hope that a similar scenario in UK will also be introduced in the near future.

Further information about paybox's B2B service can be found under:

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