Mobile payment market faces challenges as pioneers battle for dominance

Europe is experiencing a rash of mobile payment initiatives and service launches that have all the look of a market attempting to find its feet in a very unstable manner.

Notably, some banks have decided not to wait while mobile operators get their act together and have made a cheeky land-grab for the market. UK-based Barclays is the most recent, with its trial launch of PayTag, a NFC-based card that can be stuck onto a smartphone and then used to transfer money using the handset's phone number.

Barclays said reason for this approach, which excludes the operator, is that it allows consumers to make everyday payments without upgrading their current handset.

To be fair, MasterCard, HSBC, Visa and other financial services firms have made similar efforts, some of which involve the operator, to become the pioneers for contactless mobile payments.

But those brave enough to venture into this new world face a number of challenges, especially overcoming the reluctance of older age groups and women to adopt m-payments services. This viewpoint, according to market research firm Finaccord's latest payment metrics consumer research study, means that adoption of m-payments will  begradual process that could take years.

The Finaccord study, which has a UK focus, found that many consumers remain unconvinced about the benefits of making payments in this way and that large differences in attitude are visible not only by age group but also by gender.

Specifically, and as might be expected, the study found that older UK consumers "are less receptive to m-payments than their younger counterparts, and, less likely to have been anticipated, women display much less enthusiasm towards the idea of m-payments than men.

Commenting on the findings, Alan Leach, a director at Finaccord, acknowledged that the market for m-payments is sure to expand rapidly in the UK and elsewhere. However, he warned that there will be a huge challenge in persuading many consumers to use their handsets to make payments, which could take a generation or more to accomplish.

This comes as firms such as PayPal, Google and others ramp up of their efforts to replace credit cards and cash registers with mobile wallet services. An indication of PayPal's intent came recently from its CEO John Donahoe stating that the company was moving to "define the future of money."

While not detailing how PayPal might achieve this, such open ambitions must annoy mobile operators in Europe given the "interference" by the European Union in their plans for m-wallet services.

EU competition authorities have reportedly delayed the review of Project Oscar, the codename of the m-wallet joint venture established by Everything Everywhere, Vodafone and O2 UK. These operators, and others in Europe, could be justifiably annoyed that they are being hampered by excessive regulation, whilst OTT players such as PayPal, Google and others can seemingly do as they want regarding the launch of m-wallet services.

Regulation should aim at providing a level playing field, but the EU‘s prolonged involvement seems to be providing mobile operators with a very uneven battlefield. --Paul