[Dave Birch] I was in another conversation about mobile payments yesterday — pitching for work with a company that is looking to extend their payment services through the use of mobile phones — and shortly afterwards I got a note from a journalist asking me why there was so much attention on the topic. In both cases, my focus was not on using mobile phones as card substitutes but as using them as both card and POS substitutes. In other words, payment devices.

“Because 30% to 50% of new phones being sold are smart phones, why not use them as a payment device?”

[From Considering Mobile Payments? Some Hard And Soft Answers – American Banker Article]

Absolutely. And this is one of the key reasons why I think the mobile payment market here in Europe will follow a different trajectory to Japan, where there are sixty million phones capable of mobile proximity payments in circulation already and more than a million retail outlets capable of accepting them.

Celent’s Gillen estimates there are 28 million registered mobile-payment accounts in Japan. Of those, roughly 20 million are “active,” which Gillen loosely defines as an account the subscriber uses at least once a month. A single subscriber could have multiple payment accounts on his phone.

[From Report: Japan’s M-Payment Players Discover That Points Count | NFC Times – Near Field Communication and all contactless technology.]

But all of these millions of phones are used to make payments, none to take payments. And it is the ability to accept payments that makes mobile phones disruptive in the e-payments world. Back to Japan though: as I’ve mentioned before, most of the Japanese mobile proximity phones are live with pre-paid “e-money” accounts, but NTT DoCoMo have been very active in growing the credit account business as well.

As of March, there were 14.2 million subscribers registered for iD, of which 11.3 million were DCMX customers. And most of those were DCMX mini subscribers, who only require a quick opt-in to sign up for the service. They can then spend up to 10,000 yen (US$109) per month tapping their phones at iD terminals, with the transactions appearing on their phone bills.

[From Report: Japan’s M-Payment Players Discover That Points Count | NFC Times – Near Field Communication and all contactless technology.]

Even though customers can extend the line of credit beyond the initial 10,000 Yen, they are still using mobile “tap and go” for the smaller purchases, which tends to reinforce the view and the speed and convenience of contactless makes it a cash replacement technology, whether on a card or a phone.

DoCoMo’s Tamano told NFC Times the telco’s payment service is capturing enough low-value transactions, including purchases at the scores of convenience stores that accept iD and other contactless-payment brands. But mid- to high-value transactions were lagging. “It’s not the number of transactions; the amount used for each transaction is not up to our expectations,” he said.

[From Report: Japan’s M-Payment Players Discover That Points Count | NFC Times – Near Field Communication and all contactless technology.]

The main point of that article is that it is the value-added applications around payments, such as loyalty points and coupons, that seem to be driving the market rather than the payments themselves, which is to be expected because payments are commodity. The most interesting new thing to happen around the actual payments themselves is the agreement between Japan and Korea to work on interoperability. Japanese mobile proximity payments are to be accepted at Korean merchants and vice versa.

When the NFC- based payment system roll-out is completed, NFC phone users in Korea and Japan will be able to make mobile transactions after a simple downloading of a mobile payment application to their phones. As of late May, 3.3 million SK Telecom customers are using handsets equipped with the financial USIM.

[From SK Telecom-KDDI-SOFTBANK MOBILE Agree to cooperate on Mobile NFC Service | Korea IT Times]

What makes this interesting is that it is an agreement between telecommunications operators to deliver regional interoperability in a financial service. Will Asia lead the way in extending the use of mobile proximity payments through cross-border interoperability? Not necessarily. In China, there may not even be interoperability between the country’s two main operators, let alone with other regional operators.

China’s No. 2 mobile operator, China Unicom, and the country’s large bank-card network, China UnionPay, will launch a mobile-payment project with NFC phones at the world Expo 2010 in Shanghai–a direct challenge to plans by China Mobile to debut its RF-SIM technology at the Expo… In a not-so-subtle jab at China Mobile’s approach to mobile payment, which cuts out banks, UnionPay in its announcement said it will “adhere to the concept of “cooperative innovation” and “win-win results.” The bank-card network also said it will follow principles of “open-platform diversified technology and standardized development”.

[From China Unicom and UnionPay Take NFC Battle to Rival’s RF-SIM Turf | NFC Times – Near Field Communication and all contactless technology.]

Who knows how this will pan out. What is clear, though, is that

competition between telecom operators and banks for a dominant role in the new industry may also thwart the development of mobile payments in China.

[From Mobile payment market hurt by weak demand – People’s Daily Online]

Just as it appears to have done in Europe. Where there isn’t such competition — because the mobile operators have just done it themselves (eg, Korea, Kenya, Japan) — mobile payments seem to be developing nicely.

I’m looking forward to discussing the dynamics of the mobile proximity market in Japan with the aforementioned Hiroshi Tamano, Managing Director of DoCoMo Europe, who is just one of the great speakers at the IIR Mobile Payment Services conference in Barcelona on 27th-29th September 2010. It will be a great opportunity to learn from key stakeholders — including financial services organisations, retailers and mobile operators — so it’s going to be an excellent opportunity to compare the perspectives.

In an action of amazing generosity, the gentlemen and women at IIR have given me a three-day delegate pass for the event — worth approximately THREE THOUSAND EUROS — to give away on this blog as a competition prize. So if you are going to be in Barcelona on those dates and you’d like to come along to meet some of the leaders in European mobile payments services field, all you have to do is be the first person to respond to this post with the answer to our Friday quiz… The name of the French mobile proximity payment initiative is Pegasus, the winged horse from Greek mythology, but what does the Greek root of that name actually mean?

In the traditional fashion, this competition is open to all except for employees of Consult Hyperion and members of my immediate family, is void where prohibited and one step on the road to a carbon-neutral payments world. The prize must be claimed within three months. Oh, and no-one can win more than one of the Digital Money Blog prizes per calendar year.

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


  1. what does the Greek root of Pegasus actually mean? probably either based on the word for “spring, well” (pēgē): the pegai of Okeanos, where he was born; or based on an aural parallel with a word in the Luwian language pihassas, meaning “lightning”

  2. Well, I was going for “spring” or “well” so I think we have a winner! Send me your contact details Rob and I will pass them on to the conference organisers.

  3. Mobile payment is a new and rapidly-adopting alternative payment method – especially in Asia and Europe. Instead of paying with cash, cheque or credit cards, a consumer can use a mobile phone to pay for a wide range of services.
    Thanks for sharing us

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