I happened to be leafing through my (signed) copy of “Services for UMTS” by Forum friend Tomi Ahonen and his colleague Joe Barrett. In section 7.10, writing a decade ago, they say that “becoming a trusted partner money community should therefore be a strategic priority for the mobile service networks”. This was an obvious strategy then, and many people thought that mobiles would become wallets, and many people thought that transactional opportunities would drive the mobile operators to develop a central role in the future of payments. What’s more, many people (well, me) thought that the role of the mobile in the future of payments would be so disruptive as to have an impact not just on those payments but on the future of money. Having just seen the most recent figures from M-PESA in Kenya—which show 4.33m net additions in the last financial year and 28,000 agents—this prediction seems accurate. But in the developed world, progress has been slow, because of the need to negotiate a path with existing stakeholders and incumbent players. Nevertheless, there have been a couple of key developments in the past week or so.
Orange last week unveiled its Quick Tap service, while rival O2 says it is lining up for a major launch in the autumn. Meanwhile, Google this week launched Google Wallet for Android phones which might soon make the traditional wallet stuffed with cards, notes and coins a thing of the past.[From Mobile phones bring the cashless society closer | Money | The Guardian]
In the UK, Orange and Barclaycard put the first NFC handset with SWP and SIM-based SE EMV payment application on sale. And to prove it works, here I am using it to pay for my son’s haircut!
In the US, the news has centred on Google since Isis’ announcement that their wallet would be open to Visa and MasterCard applications as well, and the Google announcement of their wallet running on just one handset has caused intense interest and comment. Setting aside the wallet play, and just looking at the payment application, a very significant aspect of the Google announcement (at least to people like me) was the location of the application.
Moreover, no mobile operator is believed to be directly involved in the project to put a Citi-issued PayPass application on the Nexus S.[From Citi and MasterCard to Launch NFC Payment on Google’s Nexus S | NFC Times – Near Field Communication and all contactless technology.]
This sharpens the focus of the operators, I think. They’ve been slow to get NFC out into the market and spent a couple of years developing the operator-centric model. If other people are going to put out NFC with secure elements that are not under operator control, then that operator-centric model may not support a business model. In which case, what can the operators do to stay in the payment loop. Well, one way, that I have written about before several times, is (in Europe at least) to find ways to make payments part of the “smart pipe” proposition and stop depending on third-parties (eg, banks) with expensive infrastructure.
French-headquartered IT services group Atos Origin has formed a joint venture with the country’s three MNOs, Orange, SFR and Bouygues Telecom, to develop an internet payment platform to take on PayPal, Google and Apple,[From French operators, Atos form Buyster e-payment venture – Telecompaper]
As I’ve been pointing out for some time, the natural way to proceed is to use the PSD to obtain a PI licence, and perhaps obtain an ELMI licence as well. This is exactly what the French operators have chosen to do, and I absolutely predict that as soon as they get the licence they will join one of the international schemes so that they can issue “cards”.
The new company will apply with the central bank to become a registered payment service provider and aims to launch commercially before the summer.[From French operators, Atos form Buyster e-payment venture – Telecompaper]
Now, this would give the operators something to offer RIM, Google and Apple other than the raw bits and a secure element that they don’t want.
Our sources say there is a lot of internal debate at Google about its payment strategy, with some folks wanting to appease the carriers and have them become the payment options. Others disagree and are insistent that Google develop its own payment system – and rightfully so.[From Et Tu Bedier? Why PayPal Is Suing Google, Execs Tech News and Analysis]
You can see why people think like this. The existing mass market payment schemes were never designed for the online world and the mobile operators (aside from the odd exception that proves the rule, like M-PESA) have been slow to seize the opportunity. Therefore, the argument goes, why wouldn’t Google just do something themselves and stuff everyone else. Well, yes and no: running payment systems isn’t quite as easy as it seems, and I genuinely think that if the operators develop new mobile-centric solutions then they can provide real competition to both the existing systems, the legacy infrastructure and the startups. In the long view, the operators can still succeed.
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