Japanese mobile users can access the most advanced mobile services in the world, including mobile payment services. Subscribers exploit their mobile phones to shop in virtual malls and online boutiques and are able to use their handsets for almost any type of payment; credit card, cash, prepaid vouchers and post-paid subscriber billing. In comparison with other technically advanced countries, Japan is way ahead, according to Denis Hennessy, CTO of Valista, an Ireland-based company considered to be a leading vendor in the mobile payments and transactions field.

"We are doing what Japan was doing approximately five years ago now," Hennessy says. "There are only a few content categories that are popular now, such as mobile games and ringtones and similar."

Beyond games and ringtones, there are a lot of newer services which really haven't been launched or been successful in the West yet. But once the services and payment networks are deployed, this is expected to change. There are a number of reasons why Japan is so far ahead in this area. The technology, good personalized devices and data-capable handsets have all existed in Japan for a long time, so when the excitement grew around mobile payments, it was natural they would take off in the country.

Valista's first success in Japan was with Taito, Japan's leading developer and publisher of interactive entertainment software, best known for the hugely popular Space Invadors game. Taito wanted a mobile loyalty system where users could collect points for visiting games arcades in Japan, which are very popular. People could use these points to purchase games for their mobile handset. This project opened doors in Japan for Valista.

"The Japanese market is good," Hennessy says. "If you can make your first project positive, it can be used to win you more business. The other aspect of Japan is that they are extremely demanding. They expect quality levels that quite frankly are more demanding than the rest of the world."

Valista was created through the acquisition of US micro-payments company iPIN by Irish software development company Network365 in 2003. The acquisition gave the company a leading role globally. In addition to accounts such as Vodafone UK, AOL and France Telecom's w-HA, Valista supplies the acknowledged world leader in mobile services, NTT DoCoMo, which is the de facto standard for mobile commerce in the wireless area. Top-tier clients like these have helped the business grow.

A key lesson for Valista has been that it is very easy to 'over engineer' the technology, to the extent that users don't find it interesting any more. "The first services, for instance, had too much focus on security," Hennessy says. "Consumers found it intimidating or too cumbersome to use. Of course, mobile payment is always an alternative to other forms of payment, so if customers don't find it attractive or it is too awkward to use, they vote with their feet and won't use the service."

Hennessy believes the next challenge for the mobile payment industry is finding more types of content and more channels through which the consumer can access that content, rather than creating more ways to pay for the content. He views TV advertising as a potential channel.

"A phenomenon we have seen recently is music TV shows that have associations with ringtone providers. It is a natural way, I guess, for consumers who are interested in music to make impulse purchases."

Beyond the hype of the early days, the market for mobile payments is now far more mature after recovering from the downturn experienced when Europe's economy suffered a fall. Operators are now looking at the business as part of their normal operational infrastructure and consumers accept that a reasonable way to pay for mobile content is with their mobile phone bill. But Japan is still maintaining a lead. According to Hennessy, Japanese companies continue to innovate all the time and are very willing to invest, both in new services and infrastructure.

"The US and Europe are more focused on revenue. If a service might not generate revenue for four or six years, they are very unlikely to invest very much money in it. The return on revenue has to happen faster."