M-pay nirvana a long way off
As featured on TM Forum's the Insider blog.
In the last week I have heard of at least three new mobile payment providers being announced somewhere in the world. Be they telcos, financial institutions, new start-ups or over-the-top (OTT) players in hardware or software - what is it about mobile payments that’s got everybody buzzing and who, if anybody, is actually making money out of it?
OK, so maybe I’m exaggerating on nobody making money yet, but if you were a potential investor would you really want to take the risk? The drivers to get into this space range from protecting existing, traditional, non-digital payments market share to ambitious, all-encompassing grabs at a new, and yet proven, booming payments market.
Add to this a plethora of regulatory environments that span the financial, credit and payments space to those currently in the telecoms arena, that has its own set of rules for handling people’s money, and you see what a minefield it is for the uninitiated.
By their very nature, mobile payments center on mobile devices as a ‘new’ way to pay, issue rewards, or power transactions. But how many more ways do we need to pay for a physical or digital products via a mobile device or even bits of plastic for that matter? Is it more secure, more convenient, more economical or is it just a fad we are going through to add even more kudos to that already ‘must-have’ ubiquitous mobile device that can apparently do everything but make babies?
You may have already heard of the major players in the mobile payments race, but what is it that will give staying power to the many competing technologies, and what will be the compelling reason for consumers to choose one over the other?
PayPal has, it seems, been around forever in the digital web space with its wallet offering, but is finding the going a little tougher in the mobile world. Then there is Square that offers a consumer application to pay for goods, and a merchant platform to accept credit card payments via a smartphone with a ‘dongle’ plugged into it. Merchant terminal for the masses or the ultimate P2P payment method of the future? And they have plenty of competition in the shape of VeriFone, Intuit, mPowa, Go Payment, iZettle, etc etc.
I have not even delved into the NFC world yet, but that space is starting to look crowded as well. There’s Google Wallet that purports to handle all major credit card payments you wish to share with it. The card issuers are also active with Visa, MasterCard, Amex and others all offering some form of NFC-type offering that vary in different markets.
In the telco space, ISIS in the US - a joint venture between AT&T, T-Mobile and Verizon that aims to create a mobile wallet in devices - has been slow to hit the market and is being emulated by other competing MNOs in numerous markets that suddenly find themselves having to do something simply to be in a game that is becoming increasingly crowded with OTT payment providers.
Retailers, too, are trying to protect their own space. In the USA alone, Starbucks has its own mobile payments app. Retailers including Target and Wal-Mart are banding together to form their version of a mobile payments platform. Then there’s Apple with its Passbook, but no NFC as yet, lurking in the background waiting to pounce - but seemingly taking a look and see approach, that may be quite sensible in view of the certain fallout and rationalization that will occur in this yet unproven space.
The $64,000 question is not who will be the winner, but who will survive the longest, presuming consumers adopt mobile payments as their preferred payment method. The experts say that whoever wins the hearts and minds of those consumers and amasses the largest number of them will triumph. With that assumption comes the inevitable ‘who owns the customer’ argument, and that never seems to have a clear winner.
When it comes to mobile payments, I am the ‘customer’ of five financial institutions or card issuers, three MNOs, hold loyalty cards with six major retailers, and myriad other players including Apple and Android at the device level. For me, the one entity that gives me the highest percentage coverage for all these, plus the broadest number of merchants accepting the technology, the best security, the easiest use, the cheapest transaction rates and can be trusted, totally, will win my business.
Based on all of that, I fear I may be waiting a long time to reach my own ‘m-payments nirvana.’