Letter to the Editor (Mobile Payments World)
15 January 2008
I was interested to see this week that there has been once again interest from within the mobile industry for operators to become ‘banks’ in order to give mobile banking a jump start. However, I believe that cooperation between the operator and the bank is the only way forward in the UK to make mobile payments work.
Consumers trust their bank with financial transactions and security; much more so than with mobile operators. However, operators have valuable knowledge of “micro-charges” for real-time services like a 10p pay-as-you-go text message.
Some industry commentators argue that a postpaid contract already creates a creditor relationship with the consumer and extending that credit to digital and even hard goods is a logical and easy step. Credit management is not a mobile operators area of expertise or focus. Working with the banks, operators could add real-time access to balance checks and even extra facilities like a daily, weekly or monthly report on purchases. The combination of bank and operator provides the consumer the best of both worlds.
Japan is pioneering mobile banking solutions, with numerous Near-Field Communications deployments similar to O2’s recently announced mobile wallet trial, and an innovative technology called FeliCa. This enables subscribers to buy products on their mobile phones straight from the seller without the direct engagement of the bank in the transaction. However, we believe that it will be some time before Western Europe introduces similar advanced services, with operators still needing to establish the appropriate relationships to make these types of transactions possible.
Furthermore, operators already have relationships with mobile phone manufacturers who design the device that is going to be the payment instrument. In a subsidised handset market like the UK, it makes sense for the operator to deal with the handset manufacturer directly in order to streamline the “cash on the phone” experience.
The key to mobile payments success is collaboration, sharing the pie fairly and equitably, but if banks and operators fight to grab their own large chunks of business it will fail at the starting gate.