The tension between banks and operators isn’t about security, it’s about control, and both “sides” are stepping up their land grabs. In the Netherlands, Rabobank has launched a mobile proposition that includes a combination of mobile banking and low-cost calling. The service, Rabo Mobile, is of note because it is the bank that will be distributing the handsets to its customers not the mobile operators (in this case, Orange). This is rather historic because it’s a bank entering the mobile operators’ domain.
In the U.S., some observers — recognising the obvious attractiveness of the NFC-based consumer payments proposition — are pointing at the
mobile phone operators are the ones holding up a new era of mobile payments in the States because they haven’t found the right business model they like. But in our discussions with banks and operators, we can already see the initial positions shifting. I an confident that operators will abandon trying to get transaction slices and will simply charge the banks for the download of the payment applications into the phone. It’s control over these payment applications that is at the heart of the matter. If banks are to use mobile phones to carry payment applications, then they will come to some agreement with operators because “over the air” is a much better and more flexible solution. This has long been understood. Look at MasterCard’s first mobile contactless payments pilot, in Dallas three years ago, the banks had to manually load account information onto each cell phone before distributing them to participants. In another MasterCard trial launched more recently, participants will activate MasterCard’s PayPass application on their Nokia phones remotely, through a third-party service using the mobile network (about 500 people are taking part in a trial using 7-Eleven’s Speak Out MVNO to make purchases at one of 32,000 stores that accept MasterCard PayPass).
Whether it’s banks offering MVNOs or MVNOs offering payments, the overlap between mobile, contactless and NFC is becoming a pretty hotly contested space. And a fascinating one, which is why these are the kind of issues I will be encouraging banks, operators and suppliers to discuss together at my pre-conference workshop for the Mobile Payment conference in Amsterdam next March.