Mobile payments: collaboration is the key
In theory, the concept of mobile payments makes a strong business case, given the high market penetration rates of mobile devices, such as cell phones and PDAs, in many parts of the world. In addition, mobile operators and financial institutions, through the use of these devices, see an attractive way to allow their customers to make payments. On the consumer side, users can reap the benefits of convenience, allowing them to purchase goods and services from anywhere.
In principle, a mobile device can be used as a POS (point of sale) tool. Mobile operators and financial institutions see this concept as the next logical step to make mobile devices a trusted payment device for consumers, acting as a payment instrument that complements cash, check, credit card and credit card. Debit.
Today, financial institutions are deploying wireless POS capabilities for merchants that, in turn, compete with a consumer’s mobile phone. Several new services have been introduced around the world in which merchants accept payments from wireless POS terminals. These wireless POS terminals, for example, allow merchants to offer home delivery services in which payments are presented and accepted upon delivery of goods or services to the consumer’s location.
Wireless POS terminals use the wireless networks of mobile operators to send payment instructions to the merchant acquirer’s payment server. Consequently, wireless POS services are classified as an extension of traditional payment services. Given that in some areas of the world almost everyone will soon have a mobile phone, and most merchants offer POS terminals as a form of payment, it is at least conceivable that the mobile device will take over a large part of the mobile phone market. retail payments. .
Since wireless POS implementations are an extension of current payment infrastructures, users still need to use a credit or debit card to make purchases. The convenience associated with today’s wireless POS methods has to do with the fact that these terminals are brought to the point of purchase. For example, in a restaurant setting with the user paying her bill with a debit card from her seat, or for her groceries that have been delivered to her doorstep.
Mobile devices enable the use of numerous services, services that do not require card readers, personal computers and modem combinations, or a merchant’s landline POS terminal. Today’s mobile devices have an embedded chip that can be used to store information and provide secure authorization and identification.
The need for interoperability
But for these services to be available to the majority of mobile users, mobile payment service providers must implement services that offer interoperability. Numerous mobile payment pilot projects have been carried out that allow mobile devices to be used as a payment option, some of which have progressed to full mobile payment services (eg PayPal, PayBox, MovilPago). To date, we have found that the key to delivering a successful mobile payment service has to do with the benefits it provides to the end user and to the end user’s customers: convenience, security and freedom are key elements.
Although the industry has a long way to go before mobile devices become the payment instrument of choice for consumers, to ensure the stability of a viable mobile payment infrastructure, collaboration is the key.
Both mobile operators and financial institutions have tried, with little success, to implement their own individual pilot projects. Both parties have encountered numerous difficulties. Mobile operators, for example, due to their large existing customer base, technical knowledge and understanding of billing, seemed like the most likely candidates to provide mobile payment services. However, there have been issues associated with the risk management and multi-vendor collaboration required to achieve interoperability. Financial institutions, on the other hand, face a limited number of users and high infrastructure costs. To remedy these problems, mobile operators and financial institutions have started collaborating to jointly offer mobile payment services to their customers. For example, leading Dutch direct bank ING/Postbank Nederland has partnered with the Netherlands’ number three mobile operator Telfort to offer users mobile access to the bank’s retail apps and link users’ bank accounts. to the recharge capacities of Telfort’s prepaid service. to recharge account. In this case, the fact that these two entities are taking advantage of their natural symbiosis is a big step in the right direction.
At this moment, four entities are needed to make a payment by credit card (acquirers, issuers, merchants and consumers) to make a payment by mobile device, there are five (mobile operators, acquirer, issuer, merchant and consumers). As a result, the ideal business model includes cooperation between mobile operators, financial institutions, technology providers and industry associations to create some standardization to ensure the successful implementation of a robust mobile payment infrastructure.
Still, numerous issues, including the limited functionality available through the current generation of networks, as well as the lack of standards, to name a few, still hamper the efforts of these industry players. In addition, questions also remain about successful revenue-generating business models.
Conclusion
As mentioned above, cell phone and PDA penetration rates are higher than ever, with predicted growth rates showing exponential increases in consumer adoption. Consequently, the focus of the industry must be on the commercial side. At this time, it is not feasible for a mobile operator or financial institution to implement competing services in a proprietary model that does not include interoperability. Mobile operators and financial institutions must work together to implement mobile payment services that combine a consumer’s bank account with their mobile subscription. Offering payment services should not be seen as a competitive advantage, but as a necessity that will drive the success of mobile commerce deployment.
Today we see various initiatives taking place, including the creation of various industry associations designed to address the different issues associated with the mobile industry. With these activities underway, mobile operators and financial institutions are beginning to work together to implement new payment services. Prepaid Recharge, for example, is the first true commercial mobile payment application that is being introduced in various markets. Financial institutions and mobile operators are collaborating to allow mobile subscribers to pay their prepaid wireless bills electronically using various banking channels, such as telephone banking, Internet banking, ATMs and mobile banking, fully automating ?recharge? experience in the use of SMS (short message service).
Payment instruments are currently stored in virtual wallets that reside on the mobile device or are centralized on the open network service platform. Consumers sign up for the service through their financial institution, mobile operator, or service provider, depending on how the service is configured. Registration is necessary to link the consumer’s subscription data with their financial information and to provide the mobile device for the service. Future methods may see users using their mobile device as a way to simply access their bank accounts, so the role of the mobile operator will simply be to transport the data. Also, smart cards issued by financial institutions may start to become more prevalent.
As mobile services and infrastructures evolve, we will begin to see the true notion of mobile payment instruments live up to the “anytime, anywhere payments” hype. Soon, mobile payments will become an integral part of consumers’ lifestyles, replacing the payment instruments we have hidden in our wallets today. It is clear that cooperation between mobile operators and financial institutions is needed to build a viable mobile payment offering. It is also clear that the next logical step for the payments industry is to give consumers the ability to make payments for goods and services on their mobile devices. The only true ?pay anytime, anywhere? it is conceivable through access via a mobile device. ‘Where there’s a wireless connection, there’s a way’ and the key to industry success is as simple as giving consumers what they want.
