[Dave Birch] Our friends at Payments News alert me to the news that DoCoMo and McDonalds have got together in Japan and created a joint venture of offer electronic payment services, initially to McDonald’s own stores.  I’m highlighting this one — amongst all the other mobile payment stories floating around at the moment — because is brings together two of the categories of organisation that can feasibly attack the banks’ retail payments business.

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Isn’t this a nightmare come true for the payments guys in banks?  The retailers and the mobile phone operators getting together to provide a new solution to a problem that is not central to either of them but as a byproduct of achieving some other goals — perhaps customer intimacy or reduced churn — chips away at legacy payment systems provided by banks and while the payments guys are concerned about it, the bank isn’t, because it’s a bank line of credit that the customers are using to fund their mobile phone / retailer payment schemes.  So are the Japanese banks thinking that they should pull out all the stops to fight tooth and nail to keep the retail payments franchise or are they just, like, whatever.  Was Dan Schatt of Celent right to say that banks could lose customers because of the combination of mobile and contactless technologies?  That’s not so clear to me: if I stop using my bank’s debit card and use my mobile phone instead, then doesn’t that save the bank money (in the UK)?

The battle isn’t just about cool technologies, although cool they certainly are.  Even a management consultant must realise that one of the keys to the deployment of the DoCoMo payment schemes in Japan is the fact that the consumers are beginning to see paper money and plastic cards as just so 20th century.  It’s about cool technologies and alternative business models.  So whatever the spreadsheets might say about the transaction income that the teleco might earn (too small for a bank to make that kind of investment in a new payment solution) and the merchant service charge saving to the retailer (too small to make merchants invest in new terminals), this pincer movement will succeed because it provides a payment solution that’s just better.

My opinions are my own (I think) and are presented solely in my capacity as an interested member of the general public. [posted with ecto]

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