Is M-Commerce the Answer?

It might not happen overnight, but Morten Hofstad could have a viable payment solution for the interactive gaming industry. The answer to the industry's transaction processing problems, he says, rests in the handsets of mobile phones across the world.

The Norwegian Royal Ministry of Finance on Tuesday granted Norwegian e-bank Contopronto the first-ever European e-banking license allowing for payments and money transfers from the Internet to any bank, credit card, business or individual.

The license authorizes a system that will enable consumers to pay for services and goods through their mobile phones.

Hofstad, the CEO of Contopronto, said he is familiar with the payment issues that have plagued many online casino and sports books operators and feels his system could be the answer to many operators' prayers.

"We have been focusing on how we can solve this problem (the wide-scale rejection of Internet gambling transactions) in the U.S.," he said. "We are committed to solving it and we think we have the system in place to solve it."

The Contopronto system, which allows for transactions of up to approximately 1,250 euros, enables users to create multiple accounts on the Internet. The accounts are originally funded through and tied to the credit or debit card of the user's choice.

Users can then go to a partner retailer or bank and electronically send funds to online merchants. They can also send text messages specifying which account should be used for each transaction. Hofstad said the transaction takes about three seconds. The system also facilitates the transfer of funds from one bank account to another.

The e-banking license was issued after a year-and-a-half pilot-testing program in Norway. During that period, Contopronto inked deals with hundreds of merchants, among them McDonald's restaurants and Peppe's Pizza, enabling costumers to pay for their orders using mobile phones.

Hofstad said more than 10,000 users have signed up to use the system, even though they haven't marketed the product yet. He said users were taken by the system's user friendliness and took advantage of the ability to transfer money to friends' and/or family members' accounts.

The uses don't end there.

"We have clients now who pay their employees salaries directly into their mobiles, using Contopronto," said Knut Brundtland, chairman of Contopronto. "Rather than buying the technology for their own subscribers mobile carriers now have the availability to open technology that can be used with other carriers, effectively eliminating one of the barriers to the full adoption of e-banking."

Contopronto customers dining at Peppe's Pizza receive their bill at the end of the meal with a code printed at the bottom. The customer sends a text-message with the bill's printed code, and the payment is instantly transferred to the restaurant's account.

Contopronto's first gambling partner is the Norwegian horse betting association, Norsk Rikstotom, and Hofstad said the group wants to work with additional interactive gambling providers.

"Online gambling is among the most popular uses of mobile payment technology," Norsk Riksoto CEO Arne Herberg said. "Contopronto's ease of use creates new opportunities for industry growth."

The system will also be available in coming weeks in taxis in 25 cities in Norway.

"We obviously aren't just for gambling and betting, but we see that as a strong area of focus," he said. "We have no affiliation with credit card companies or wireless providers; we are truly independent and we welcome the betting industry."

Another selling point to the Contopronto system is the ability to send money to individuals. Once a payment is accepted, an account is automatically opened.

The company recently opened its first office abroad in London and is in discussion with Norwegian and U.K. airlines about the possibility of using the system for the sale and delivery of flight tickets.

And while American-based credit card companies and legislatures try to ban the use of "banking instruments" to fund online gambling transactions, Hofstad isn't concerned about any efforts putting a halt into his system.

"You don't have to go online to gamble anymore," he said. "With our system, if the sports book is one of our partners, it can all be done through the mobile phone with no credit cards."