There was an interesting article in the August edition of E-Finance & Payments Law & Policy from Carlo de Meijer and Jonathan Bye at RBS. It looked at the possibilities for different players in the mobile wallet world, exploring the potential for retailers, banks and handset manufacturers. I couldn’t help but notice that it doesn’t mention mobile operators. Mobile operators, by and large, are finding mobile payments tough.
Norwegian mobile payments service Valyou has been shut down, with owners Telenor, DNB and SpareBank 1 blaming a lack of NFC-enabled payment terminals and support from their fellow banks and telcos for their project’s failure.[From Finextra: Finextra news: Norwegian mobile payments service Valyou shuts down]
Then I read John Stewart’s article “Dropped Call” in the October Digital Transactions magazine. He writes that many people think that the balance of power in mobile payments has already shifted away from the operators. They still have some power (he uses the example of Verizon Wireless holding out on Samsung Pay) but it is really just negotiating power. He also quotes Juniper Research saying that it is “rather sad if the operator role is to be defined as an inhibiting factor on service providers rather than an enabler”. Incidentally, they also note that “the minute the banks got the opportunity to pursue a model cut out the operators, which was what host card emulation offered, they took that chance”.
So that’s it for mobile operators then? Well, no. At least, not necessarily. As that Digital Transactions piece goes on to say, the operators might not be done in payments after all. There may be a role for them in critical businesses such as transaction security and user authentication (my emphasis). And some observers argue they could expand their stake in carrier billing as well, so they still have opportunities to do something in the mobile transactions world.
Of these there opportunities, I would say that if you can authenticate the device and authenticate consumer then you can help everyone else in the value chain to deliver a more secure transaction infrastructure, and that has some value. Now, I rather agree with this line of thinking, and I’ve made similar points before.
The key question is: will the banks and the mobile operators and the handset manufacturers and the platform providers the government be able to work together to deliver a mobile ID infrastructure just as they did not work together to deliver a mobile payments infrastructure?[From Mobile payment is fun, but mobile ID might be indispensable | Consult Hyperion]
Maybe I was being a little unkind to the banks and the operators. It could be that in the case of identity, the dynamics will be different and the banks and the operators will find more common ground, where the operators provide the identity infrastructure (i.e., the digital identities and at least one of the virtual identities bound to them, namely the operator identity) and the banks provide the identities (i.e., the binding between the digital identities and mundane identities). Back in 2012, commenting on the GSMA Operator Connect proposal, I said that:
I don’t understand why MNOs don’t provide this service already[From Mobile identity on the move | Consult Hyperion]
The reason I said that was because in the preceding couple of years, Consult Hyperion had been commissioned, more than once, to look at the potential for mobile operators in the identification and authentication space and we had been involved in a number of discussions on the topic, so I’d already formed the opinion that mobile ID would make sense. In fact, back in 2006, commenting on the Norwegian BankID scheme, I observed that mobile identity was more of an long term play than mobile payments (because I thought there would be more competitors in the mobile payment space), and went on to note “I said a long time ago that ‘SimID’ might be more profitable than Simpay (*)”.
Well, I don’t want to sound like a broken record but nine years on this is what I’ll be talking about again at the GSMA’s informal workshop on Financial Services in London on Thursday 26th November. Look forward to seeing you there!
(* Note to younger readers: Simpay was an attempt by mobile operators to build their own pan-European low-value retail payment scheme.)
The MNOs first thoughts are HCE might have been negative, but they need to rethink. It’s a great opportunity for them if they decide to take it.