Mobile financial services: Can't we all just make a deal?
By Brian Dolan
Would you hand a waiter your mobile phone to pay for your meal tab? Although a waiter could do more damage to your financial situation with a credit card than a mobile phone, most people would have difficulty handing off their trusted device.
Nevertheless, wireless carriers, banks and credit card companies say this scenario may be inevitable in the future.
This was just one of the many topics discussed during the M-Commerce panel at the CTIA Wireless I.T. & Entertainment conference in San Francisco earlier this week.
According to NXP Semiconductors business development manager for near field communications Dave Holmes, NFC payments services via mobile phones are already popular in Japan. "Japan is well ahead of us in many areas of mobile commerce particularly in contactless mobile transactions space... but the business networks, business style, and business ecosystem is fundamentally different over there than it is here in the U.S.," Holmes said, adding that he thinks it is possible that a carrier, such as NTT DoCoMo could invest in a bank and a retailer to drive the mobile commerce ecosystem. However, in the U.S., the market is much too complicated for that type of scenario to happen easily.
Damien Balsan, a director of business development at Nokia, said that the chief barrier to mobile financial services in the U.S. is the business strategy. "It's so hard when you have banks making money on transaction fees and working so hard on the risk management and on the other hand you have the operators setting up their networks... It's so hard to get them to do some revenue sharing."
AT&T's director of mobile financial services Spencer White told Prag Shah, CEO of Mobilians, that he needs to be patient and take a lot of time to explain to carriers the value proposition of mobile financial services. However, Shah did not agree that the technology cycles business model development should take quite so long. " "The cycle time for both the chipsets and the handsets needs to come down since 18 to 24 month cycles are not uncommon," Shah said. "Even though the space is heating up very quickly the technology cycles are long and figuring out the business cycles are long, too."
Shah later asserted that the barrier to market for mobile financial services "is not the technology--it is all about the business model."
James Anderson, MasterCard International's vice president of product management, agreed: "If I were king for a day, one thing I would do is lock my best issuing [financial services] customer and my best carrier customer in a dungeon and put them in chains and not let them out until they came to a deal," he said. "It might take three months."