Emergency Financing Alternatives

Discover nonbank options for financing your business during a severe cash crunch.

From: BusinessTown.com May 2000
Asset-backed financing While you are unlikely to obtain new or additional unsecured bank lending if you are facing a cash crunch, you may be able to obtain asset-backed financing. Try approaching nonbank sources such as commercial financing companies. Unlike most bank lending, true asset-backed lending focuses primarily on the value of the asset used for security, rather than the ongoing cash from the business.

You do need to keep in mind, however, that such lenders, unlike banks, will seldom hesitate to seize your assets after even a few missed payments. And you may also have to pay a stiff premium over traditional commercial bank loan rates.

If you are already borrowing from a bank, you need to be sure that borrowing from another source does not violate your loan agreement. And, even if it doesn't, do keep your bankers apprised of any other borrowing you undertake. If you do look creditworthy to another lending institution, even if it is nonbank, your banker will probably look more favorably upon your account.

Factoring If you have a good amount of solid receivables, factoring may enable you to raise a lot of cash in a hurry. Factoring firms are private nonbank lenders that buy, outright, your creditworthy receivables and collect them at their own risk. Even discounting the element of risk that factoring companies assume, they will typically seek a higher premium than bank lenders offer. This is especially true if your business is facing difficulties.

Lease-back Look around your office. The furniture, computers, fax machines, phones, and any other equipment you may own have a cash value. You can realize the value of your assets in instant cash and still retain the equipment for use in your business! You just need to find a leasing firm willing to buy the items from you and lease them back to you.

Leasing is similar to asset-backed lending. First, the financing is based on the value of the asset. Second, you will probably pay a significant premium over that of a bank loan. One major difference, though, is that the leasing firm will actually own everything you lease. Since all the equipment belongs to it, it won't hesitate to take physical possession if you fall behind in your payments.

A big advantage to leasing is that, even though it must be disclosed as a footnote in your financial statements, it doesn't actually appear as debt on your balance sheet. It isn't considered to be as onerous as debt by debtors and other lenders or suppliers.

Source: http://www.inc.com/

Estate Planning

Despite a presidential veto, the "death tax" is still a hot political issue in 2000. What's a small-business person to do?
From: Inc. Magazine, Dec 2000 By: Jill Andresky Fraser

Despite a presidential veto, the "death tax" is still a hot political issue. What's a small-business person to do?

It's ironic. Today's financially savvy entrepreneurs have distinguished themselves from their predecessors by displaying a willingness to dive right into the complicated, time-consuming, and all too often costly process of estate planning. Many of them have grasped the importance of getting started early and have dutifully upgraded their plans with each new phase of corporate growth. They've come to terms with the undeniable benefits of making gifts through irrevocable trusts. So how can it be that now, of all times, the so-called death tax has seized center stage in the nation's political arena, with members of both parties vowing that it's only a matter of time before it disappears entirely?

"Clients are definitely asking me what I expect to happen to the estate tax," says Laurie J. Hall, a partner and estate planner at Palmer & Dodge, a law firm in Boston. "That's a difficult question for anyone to answer right now."

Still, estate planning is too important for entrepreneurs to put off until the political debate is resolved. Aaron Cohen, CEO and cofounder of Concrete Inc., a four-year-old consulting company that helps companies develop Internet businesses, says, "I'm in a fast-growth mode, a capital-markets mode. It would not be appropriately conservative for me, speaking from a personal financial perspective; to just take for granted the idea that sweeping changes are going to occur that would eliminate my need for estate planning. The longer I delay, the more valuable my company will be -- which will just make estate-planning activities more difficult and more expensive."

There may be no better time than the present to figure out which strategies make sense in today's uncertain environment and which might be worth postponing or redesigning. Some observers remain dubious about the prospect of a major overhaul. "Many people might not realize this, but some years ago Congress promised to lower the top estate-tax rate at some point in the future. But it never happened, even though the vote did go through," says Carlyn McCaffrey, a partner in the trusts-and-estates department of Weil, Gotshal & Manges LLP, in New York City. "The timing for that tax-rate reduction just kept getting pushed into the future."

Currently, the top federal estate-tax rate is 55%. Through the end of 2001 the lifetime exclusion amount (the value of the estate over which estate-tax returns must be filed) is $675,000. That gift-and-estate-tax exclusion is scheduled to gradually rise to $1 million by the year 2006. There's an annual exclusion for up to $10,000 for gifts to each of any number of people; that means that a husband and wife can each transfer up to $10,000 a year in cash or assets to a child without triggering a tax liability. There is usually no tax on bequests or gifts between spouses.

The most recent reform measure, which was approved by the House and Senate earlier this year but vetoed by President Clinton, would have phased out the federal estate and gift taxes by the year 2010. "Looking at this realistically," McCaffrey says, "even if that bill did get passed again, this time without a veto, it's only another promise. It's a long time between now and 2010, and nothing prevents another set of politicians from coming in and changing the law once again. People can't count on significant change -- and they shouldn't count on it."

Appealing as it may be to hope for political miracles (especially when tax savings would be attached to them), business owners tend to agree. "If the estate-tax law is repealed -- which I personally don't expect to see -- it would be foolish to forget that what one government takes out, another can put back," says Terri Alpert, the founder and CEO of Professional Cutlery Direct LLC, based in North Branford, Conn. Despite the current political debate, Alpert has no regrets about her own estate-planning activities. When she incorporated her business as a limited-liability company, four years ago, she turned over a majority share of her company's stock (minus voting rights) to trust funds for her children.

"My husband and my corporate attorney are the trustees, and I can replace them if I ever want to, which I can't imagine doing. My own financial interests and management control are assured by the management contract that I've set in place. What's to regret?" Alpert asks. "I view this as a hedge that will protect my family's interests no matter how big my company gets or what happens to the tax laws. There wasn't any downside for me, other than the cost of setting up the trusts, which was relatively low."

But even though few experts expect to see the dismantling of our gift-and-estate-tax system, more-modest adjustments are probably inevitable. "The truth is, there hasn't been any significant change in these laws since the 1980s," says Jonathan Forster, a lawyer and tax planning specialist at Greenberg, Traurig LLP, in Tysons Corner, Va. "There's so much momentum for change -- if only to keep up with all the wealth that's been created in the nation during this recent period of prosperity -- that I'd be surprised if we don't see a bumping up of the lifetime exclusion, maybe to the point where a couple could pass on something between, say, $3 million and $5 million in bequests without needing to pay any taxes."

McCaffrey agrees. "We easily could see a situation in which people who are now at the margins, when it comes to the exclusion amounts, will no longer need to carry out extensive estate-planning activities. The problem is," she adds, "this is very tough to predict, especially for entrepreneurs whose businesses may grow rapidly or unexpectedly beyond the exclusion point. My great fear is that people will get lulled into inactivity because they think they'll be all right -- and then when they realize that they need to act, they'll find that they've missed out on the best opportunities."

For owners who are still uncertain about whether to act, there's another point to consider: Even under rosy reform scenarios -- something along the lines of the tax phaseout Congress passed this past summer -- some form of estate tax will remain for nine years. That represents a large and dangerous window of vulnerability for any growing company. If you suspect that your future heirs won't be able to pay Uncle Sam without conducting a fire sale of your company or its key assets, you owe it to everyone (and to your business as well) to explore estate-planning options sooner rather than later.

source: http://www.inc.com/

Avoiding Insurance-Related Traps

Assumptions you make about your business insurance policies could be keeping you from added savings or exposing you to unexpected liabilities.
From: BWideas.com Inc. February 2000 By: Barbara Weltman
As a small business owner you may be operating under some false assumptions you need to clear up:

• Trap:
Believing that your company-paid health insurance is tax free. If your partnership or S corporation pays for your health insurance, the company may deduct the coverage as a business expense. However, the coverage is taxed to you as a guaranteed payment (in the case of a partnership) or compensation (if you own more than 2% of an S corporation). You can deduct only a percentage of it on your personal return as an adjustment to income (i.e., you don't have to itemize to claim this write-off). In 2000, this deduction is limited to 60% of the cost of the coverage. (The balance is part of itemized medical expenses.)
• Idea:
If your spouse works for your business and you provide coverage for employees and their spouses, then you'll receive tax-free coverage as the spouse of your employee.

• Trap:
Assuming you can deduct the full cost of your multiyear policy in the year you pay it. If your business uses the cash method of accounting, you can only deduct a ratable portion of the coverage in the year the premiums are paid. (Accrual method businesses can accrue only so much of the premiums as relate to the current year.)
• Idea:
Unless the business realizes a premium savings for paying up front for multiyear coverage, then take only an annual policy. There's no tax advantage to the multiyear policy.

• Trap:
Assuming your homeowner's policy covers your business equipment in your home office. If you run your business from home, your computer, office furniture and other equipment may be uninsured or underinsured. Further, your homeowner's policy may not cover injuries that business visitors may sustain on your premises.
• Idea:
Check your current policy. You may be able to upgrade it with a rider or you may need to buy a separate policy (the cost for this type of coverage generally is modest).

• Trap:
Assuming that your professional liability policy covers claims with respect to your Web site. If you are an accountant, attorney, or other professional and have a Web site for your business on which you display information that the reader may use for free, there's always the potential for liability. Your malpractice insurance probably doesn't cover this type of liability since you're not offering advice to clients (the Web viewer isn't paying you).
• Idea:
Look into "cybercoverage," a type of insurance to cover potential liability arising from a Web site (including copyright and trademark infringement, errors and omissions in cyber content, and invasion of privacy).

Source:http://www.inc.com/articles/2000/02/17234.html

Tips for Finding Money Now

A list of some of the best sources for financing. Includes information about bank loans, nonbank creditors, private and public equity sources, and international finance.
From: Inc. Magazine, March 1999 By: Jill Andresky Fraser

How to Finance Anything
Despite the tumultuous and unpredictable state of today's capital markets, entrepreneurs still have plenty of ways to raise funds for their companies. Here are 20 that offer particular promise in the current economic climate. Some represent new marketplace solutions to the perennial financing problems of business owners; others offer new twists on time-tested strategies or financing tools. But don't get us wrong--we're not suggesting that you overlook traditional financing strategies, such as approaching angel investors or proposing financing deals to your customers or suppliers.

Bank Loans

1. SBA Express was launched last fall in yet another effort to lessen the paperwork hassles attached to applying for a Small Business Administration-backed loan. Bank-qualified business owners can borrow up to $150,000 without going through the standard SBA application process and are guaranteed a loan decision within 36 hours. Since the loans are guaranteed by the government agency only at 50% of their face value, many of the 500 or so eligible "preferred" lenders (which include commercial banks and other financing institutions with good track records on their other SBA loans) have yet to sign on.

2. Community banks, the antithesis of all those huge financial institutions that are merging and acquiring themselves into the deal-making stratosphere, offer the best (and maybe the only) chance for many small or young companies to start building a banking relationship. While the small banks may have fewer products than the giants do, their advantage to entrepreneurs is their flexibility. To locate possible lenders in your region, contact the Independent Bankers Association of America, which can provide leads to more than 5,000 community banks.

3. The (self)chosen few is the way we like to think of that select group of national banks that do more than just talk about their interest in backing start-up companies. Their loan officers are out there--even in today's chilly credit climate--aggressively launching new products and actually approving deals. Silicon Valley Bank perennially crops up on this list; so, increasingly, do Chase and Fleet Bank.

Source: http://www.inc.com/

Small Businesses Get a Tax Break Too

The corporate tax-cut bill recently passed by the Senate holds a few key cuts for small business owners.

By: Michael Taylor
October 13, 2004 --Included in the American Jobs Creation Act of 2004, the $136 billion corporate tax-cut bill passed yesterday by the U.S. Senate, is a provision to reform Subchapter S thereby increasing the number of small business eligible to receive the law's unique treatment of taxes.

Under Subchapter S, corporations are taxed only at the shareholder level. Business income is passed from the enterprise to the shareholder where it is taxed as personal income rather than corporate earnings.

"Subchapter S avoids double taxing," said Paul Merski, Director of Federal Tax Policy for The Independent Community Bankers of America. "A C corporation [traditional form of incorporation] takes two bites out of the apple, whereas S takes only one."
The new legislation expands Subchapter S eligibility through two key reforms: increasing the number of shareholders permitted from 75 to 100 and counting family members as only one shareholder.

These two changes alone could lead to a substantial tax savings for small businesses. "By allowing a greater number of shareholders, small businesses can save $670 million in taxes," said Merski. "Counting families as one shareholder could save push the tax relief well over $700 million."

Other reforms in the legislation include: permitting Subchapter S shares to be held in IRAs, extending through 2007 the increase in small business expensing from $25,000 to $100,000, accelerated depreciation for leasehold and restaurant improvement, and a decrease from $100,000 to $25,000 in the annual allowable expense of certain SUVs for businesses use.

source: http://www.inc.com/

Add voice to your web siteAudio Generator - sound marketing

Want a piece of sound marketing advice? Add a human voice to your site. OK, it's a bad pun, but let's take a closer look at this marketing tool that appears to be really taking off.

It's well known that the more "human" you can make your products and services, the more likely people are to purchase. The human voice and other sounds can be a very a powerful motivator in the sales process; but this has always presented some major hurdles in relation to presenting audio on the web.

In the past, many web masters have tinkered with combining sound and their web sites - often with disastrous results. I'm sure you've experienced it, innocently cruising the web and landing on a page only for some ghastly midi file to begin playing unexpectedly, causing you to gag on your coffee.

Other site owners decided that having an automated voiceover on their pages was a good idea - the talking web site. Again, the unexpected occurrence of sound startled more than intrigued many web surfers and potential clients. Also, the loading of the voiceover often interrupted normal navigation.

Marketers started getting on the right track with the talking web site strategy when they gave visitors a *choice* of listening to an audio representation of the textual content of the page. Problems still remained in that the visitor usually needed to download special audio plugins and because of the size of the sound file, it really wasn't worth the bother. Good quality voice recordings were just too bandwidth heavy and the distractions of the plugin application starting up really interrupted the sales flow. Also, the cost of the bandwidth to the site owner for streaming messages that may be 5 minutes long was very restrictive, not to mentioned the time, hassle and expense in compiling a sound file.

All that appears to have changed.... I've just finished trying out a rather nifty voice application called the Audio Generator. The learning curve for using this tool was all of 5 minutes - seriously, it was that simple and there was no software to download. In a nutshell, the Audio

Generator system works like this:
• Pick up the phone
• Dial a number
• Enter your member PIN
• Start speaking
• Finish speaking
• Copy and paste one line of code onto your web page (for the control buttons to appear)
• Done! - Your sales or support voice message is instantly ready for your site visitors.

Even though I am based in Australia and the Audio Generator system is in the USA, which meant a long distance call, the finished product was of very high quality.

There was no significant delay caused by operator voice prompts; e.g. "press one to continue.. now press 3..." etc - I was recording within about 10 seconds of being connected.Once you've finished recording, the voice messages are instantly saved on a very fast server, so you never have to worry about bandwidth or delivery issues - that's the responsibility of the team at Audio Generator.There's no plugins for your visitors to download in order for them to hear your voice recording. All you need to do is to add the line of code to your web pages or email and the recording will be available for playback. The Audio Generator uses the FLASH™ format for audio messages. Unlike Real Audio™, MP3 or Windows Media Player™, there's no waiting for other software to load once your visitor clicks the play button - it's *very* quick to respond.

The Audio Generator system opens up all sorts of possibilities for marketing, including:
• Talking Emails
• Voice recordings strategically placed on critical pages
• Talking newsletters
• Voice lessons and tutorials
• Audio postcards
• Audio testimonials from your clients
So, if you're looking for the next "big thing" in web marketing, this may well be it. Many voice technologies have emerged and then disappeared over the past few years; but judging profile of some of the people now using this system, the Audio Generator has firmly entrenched itself as the application to which other companies will compare themselves.

source: http://www.tamingthebeast.net

Smart cards will take secure electronic transactions to the next level

Without a doubt 2004 is going to be a landmark year in the history of the smart card. While it will take years to realise the full potential of the technology, several important steps forward will be taken over the coming months. Of these, the use of the smart card for electronic financial transactions will be among the most significant.Barclaycard has already announced that it is launching a six-month pilot scheme to test the use of smart cards for e-transactions. Other banks and card issuers are sure to be watching the results of this trial very closely as it is crucial for demonstrating that the smart card can genuinely become the de facto tool for authenticating all financial transactions. The expectations are that in addition to the use of smart cards for payments in the physical world, the widespread deployment of unconnected smart card readers will open up the potential for smart cards to become personal security modules. As such they will be used to authenticate all channels of transaction, be it physical, online, telephone or commerce through interactive TV.

The security benefits are clear to see. The inclusion of a smart card in every financial transaction will add a crucial second layer of authentication. This two-factor authentication process of something you have as well as something you know should reduce fraud. Given that the EMV smart card rollout is predicted to dramatically increase Card Not Present (CNP) fraud, the parallel introduction of unconnected readers for smart card transactions is very timely.

The rollout of unconnected smart card readers
In terms of the technology behind the unconnected smart card readers, it is the recent introduction of a common standard that is the important innovation. Earlier this year APACS, in association with MasterCard, released specification standards for unconnected smart card readers. This has allowed leading smart card reader manufacturers to offer products for mass consumption at a commercially viable cost.

At the moment the maximum level of security available to consumers is user and password authentication, which is already seen as being inadequate for securing financial transactions. It is anticipated that over the next two or three years some, if not all, card issuers will wish to offer stronger levels of authentication based around EMV smart cards. To do this they will need to provide unconnected smart card readers for customers wishing to make e-transactions. With £1.17bn worth of online shopping expected to have been done in Christmas 2003 in a market that has grown by over 40% over the year, banks have added incentives to provide increased security for such transactions. This is especially timely as on-line credit card fraud has now topped £100m a year, an increase of 33% over a two-year period. The EMV migration is expected to push this value even higher as a lot of the annual £454m worth of credit card fraud will shift to CNP transactions.

Add voice to your web site
Audio Generator - sound marketing

Source: http://www.thales-esecurity.com

Web of Confusion

Although the insurance industry has come a long way in a relatively short period of time in terms of its utilization of the Internet, many questions about the technology's long-term impact remain. But in this ambivalence, insurers are no different from other businesses, which also are still trying to figure out the Internet. It's not so much the technical aspects of "being online" that challenge, but rather the ways we want it to shape customer interactions. Two recent business developments illustrate how this still-evolving process remains full of complexities. Last month, Northwest Airlines announced a new tiered fare system that penalizes travelers who buy their tickets in person at a ticket counter. The best price is available only online. What's odd is the emphasis on penalties for purchasing a ticket in person. The discount airlines put a more positive spin on tiered pricing by marketing the fares one gets in person as "normal" and online fares as "discounted." It's the simple difference between the carrot and the stick.

Then there's software company Veritas, which has declared Fridays to be "e-mail free" in order to improve productivity. It's ironic that the key to making employees more productive may be to wean them from an online technology that has been touted as the ultimate productivity tool.

The e-mail-free-Fridays initiative has accomplished its goals at Veritas, while at press time it was too soon to tell if Northwest would in fact entice more customers to buy their tickets online. The outcome of both experiments could be significant to insurance companies that are still defining not only multichannel distribution strategies, but also the ways in which employees access and process corporate information.

Source: http://www.insurancetech.com/

Electronic Cash the Way It Ought To Be

Suppose we had it our way. Suppose we sat down to create digital cash that had all the right properties. What would these be? Think of the attractive properties of currency--physical cash. [27]

1) Physical cash is a portable medium of exchange. You carry it in your pocket to give to people when you make purchases. The digital equivalent of this process could be provided by smart cards, which would have the mobility of physical cash and even improve on it. The weight of $1,000,000 in digital money is the same as the weight of $1.

2) You would want the ability to make digital cash payments off-line, just like you can with physical cash. A communication link between every store you shop at and your bank's authorization computer shouldn't be required. Moreover, if digital cash is to have all the desirable qualities of physical cash, you should be able to transfer digital cash directly to another smart-card-carrying individual. Smart cards that could connect directly to other smart cards would be ideal in this respect, and would represent an improvement over physical cash. Even if everyone observed two smart cards communicating, they would have no way of knowing whether the transaction involved $5 or $50,000. There would be no need to slide money under the table.

3) Digital cash should be independent of physical location--available everywhere and capable of being transferred through computer and other telecommunication channels. So we want a smart card that can jack into the communication nodes of the global information network. One should be able to pop into a phone booth to make or receive payments.

4) Got change for a dollar for the quarter slots in the pool table? Just as we "make change" or divide physical currency into subunits, so should electronic cash be divisible. Is this a problem? Hmm. Electronic calculators can perform an operation know as division, and so can third-graders. So smart cards ought to be able to handle this also, even if it presents a few difficulties for theoretical cryptology.

5) To be secure against crooks and rip-off artists, digital cash should be designed in such a way that it can't be forged or reused. We wouldn't want people spending the same money twice, or acting as their own mini-Federal Reserve Systems and creating money from nothing. This cryptological problem is different between on-line and off- line cash systems. In on-line systems the bank simply checks whether a piece of cash has been spent before.
Proposed off-line systems rely on a framework developed by David Chaum. Chaum has been the preeminent cryptological researcher in the field of digital cash [28]. In his framework for off-line systems, one can double-spend the same piece of digital cash only by losing one's anonymity. This has considerable value, because the bank or the person defrauded, knowing the identity of the devious double- spender, can send out a collection agent.
But I consider this way of enforcing the "no double- spending" rule a serious flaw in Chaum's framework. Catching thieves and rip-off artists is not the comparative advantage of either banks or the average citizen. (Banks are usually only good at providing transactions services, and charging interest and fees.) Would you really want to see, say, The First Subterranean Bank of Anonymous Digital Cash merge with the Wackenhut Corporation? Luckily, however, there are alternative approaches that will prevent double-spending from ever taking place [29].

6) The most important requirement for individual freedom and privacy is that digital cash transactions should be untraceable, yet at the same time enable you to prove unequivocally whether you made a particular payment. Untraceable transactions would make impossible a PROMIS- type data sorting of all your financial activities. In Joe Blowup's financial chronology, discussed previously, you wouldn't be able to connect Joe Blowup's name to any of his purchases. Similarly, no one would know about the money you wired to Lichtenstein, your purchase of Scientology e- meters and the banned works of Maimonides, or your frequent visits to the Mustang Ranch. Privacy-protected off- line cash systems can be made nearly as efficient as similar systems that don't offer privacy.

source: http://www.orlingrabbe.com/money2.htm

HOW FAR TOWARDS A CASHLESS SOCIETY?

Are we headed for a cashless society, where all payments are made by cards via the technology of EFTPOS (electronic fund transfers at point of sale)? Not necessarily, according to Sheri Markose and Yiing Jia Loke, writing in the latest issue of the Economic Journal. Their research indicates that the low cost of getting cash from an ATM (automated teller machine) means that cash can hold its own and even enjoy a resurgence when interest rates are low.

Innovations in payments system underpinned by an electronic technology are transforming the monetary landscape of many countries, the researchers note. But the potential technology-driven substitution of cash by card payments raises a number of crucial issues for monetary policy-makers. In particular, the decline in transactions balances of cash is governed by the rate of adoption by consumers and merchants alike of card payments facilitated by EFTPOS.

Adoption of a ‘network good’ such as a new payments medium in an economy depends on mutual expectations of providers and users of the goods. Thus, against the status quo of a fully versatile currency, consumers will be encouraged to adopt card payments only if they expect a critical mass of merchants will accept it in lieu of cash. Similarly, merchants will hesitate to subscribe to EFTPOS links unless they expect a growing proportion of retail expenditures to be card-financed by consumers.

Using analysis of this kind, Markose and Loke throw light on the complex dynamics between the four crucial elements that characterise the modern ‘cash-card economy’:deposit interest rates; the number of merchants with EFTPOS facilities; the proportion of retail expenditures that are card-financed as opposed to cash-financed; and the keen cost competitiveness in the ATM provision of cash. It is last element that drives the balance between the two competing payments media, cash and card. At the margin, both media can co-exist only if their user costs are equal.

This produces two important features of the analysis. First, the interest rate elasticity of cash-card substitution is a function of the level of EFTPOS adoption in the economy and this elasticity is very high at low interest rates. This may result in perverse effects from attempts to contract (expand) bank credit and liquidity by raising (lowering) interest rates.
Second, the cost competitiveness of ATM cash provision suggests that cash can hold its own and even enjoy a resurgence when interest rates are low.

Further, the researchers argue that the slowdown in the growth of monetary base is governed by the levels of EFTPOS adoption and the relative network costs of cash and card use. Using historical payments data from the Bank of International Settlements and the European Monetary Institute from 1990-8, they devise a methodology to estimate the level of EFTPOS adoption in an economy.
source: http://www.res.org.uk

Mobile Transactions

The target of this initiative is to use existing and emerging standards to build a common framework and to create an implementation roadmap in order to enhance the fast adoption of trusted mobile e-business. Representatives from the telecom, financial and the IS/IT industries will be invited to contribute to the effort. The possibility to handle trusted electronic transactions from a personal mobile device is regarded as one of the most important areas of the Mobile Internet. The mobile device can be a tool for a variety of services, such as banking and trading services, credit card and payment services, loyalty/bonus services and ID-card services.

The Ericsson Motorola and Nokia initiative defines an open platform for secure mobile phone transactions. The aim is to offer solutions where security and payment services will be integrated as a standard into hundreds of millions of mobile devices in years to come.
There are today several activities ongoing in order to facilitate secure transactions from mobile devices.

The initiative from Ericsson, Motorola and Nokia will merge existing initiatives with the de facto standard for secure mobile electronic transactions, including not only the technical capabilities but also the context for how this concept shall be used and executed. Some of the key technology cornerstones will be WAP security functions, such as WTLS (Wireless Transport Layer Security) and WIM (Wireless Identification Module) - as well as wireless Public Key technologies (PKI) and already implemented mobile payment schemes. "For a user, a mobile phone is a highly personal device that today is expected to be easily and securely tailored according to an individual need.

These expectations cover also the fast emerging mobile e-business sector. A mobile device will be the platform to bridge the virtual and physical worlds of e-business. Integrating security and transaction applications on a common core standard and platform will create global mass market for mobile e-business. This will benefit all participants from various industries within the value chain, in addition to hundreds of millions of consumers throughout the world," says Matti Alahuhta, President, Nokia Mobile Phones. "The ambition is to formulate an environment which allows mobile operators, financial institutions and other service providers to facilitate secure mobile transactions," says Jan Ahrenbring, Vice President Marketing and Communications at Ericsson Mobile Communications.

"Ericsson estimates that by 2004 there will be around one billion users of mobile telephony and some 600 million mobile Internet subscribers worldwide. The most important thing that is needed to get all these consumers to start using mobile e-commerce is a standard, which makes it safe and easy to use," says Ahrenbring.

"Motorola is committed to the development of the mobile Internet and making it secure, not only via the Web-enabled phones that make access possible, but also the technologies that enable this world without wires, said Rick Darnaby, Senior Vice President & General Manager of Europe, Middle East & Africa for Motorola's Personal Communications. "Trust is the key element for mobile interaction and transaction. We envision mobile devices will soon play a key role in virtually every aspect of our lives. We want to give consumers the ability of stay securely connected, informed and to conduct sensitive and financial transactions anytime and wherever they are." Creating a standard for secure mobile transactions also opens up the possibility for small transactions to be handled via mobile devices, for example ticketing applications. Mobile devices will also be used to handle short distance payments and transactions enabled by the Bluetooth technology, for example to point of sale machines and parking meters. The initiative includes methods for service providers to expose their brand in mobile devices.

Nokia, Ericsson and Motorola are expected to issue technical and other details about the context for secure mobile transactions by the end of May on their web sites and invite others to participate in the work. The ambition is to formulate an open framework before the summer, based upon input from related industries.

source: http://www.cellular.co.za/technologies/met/met.htm