Mobile Payments Making Their Way into US
In my last month's blog I wrote about Billing Transformation being one of the top 3 priorities in 2010 for the carriers. This month we will talk about the technology that will matter the most for mobile phone users in the next couple of years.
While Japan and South Korea are at the forefront in turning mobile phones into digital wallets and Europe following their way, how it would turn out in US is still murky. Advantages of mobile payments are obvious. You don't need to carry credit/debit cards anymore as all your payment information is going to be tied to your mobile. You can manage one or all your cards with one phone call. It helps merchants to collect more money from consumers which in turn bring down the prices. In developing nations, where majority of the population don't have credit cards and bank accounts, mobile payments concept is more obvious.
Adoption in US has been slow mainly due to challenges around fraud prevention, regulatory issues, and cooperation between all the parties. Multiple parties need to agree up on how to split the pie. You have to get the device manufacturers such as Nokia and Motorola to build NFC technology into mobile phones; you have to get carrier networks to enable your mobile phones to make payments and then bill you for those charges; alternatively you have to get credit card networks and card issuers to issue chips that replaces plastic cards to put in your phone; you have to get payment terminal providers like VeriFone to enable NFC technology; and you have to get the retails like Starbucks, and Target to participate.
In Japan many of above are owned by same company which made it easier. In US, Verizon, AT&T, and T-Mobile are exploring a joint venture to develop a payment service which will open new revenue streams for them whereas WellsFargo and Visa launched a mobile payment pilot to test consumer mobile payments and services. Just like you buy ringtones or music for your phone, you can wave your mobile device in front of a NFC (Near Field Communication) device at Starbucks and buy mocha, and you'll get billed by your network carrier, totally cutting the credit card companies and the banks out of the loop. Just like plastic replaced paper, these mobile devices are going to replace plastic.
Turning these pilots into rollouts and upgrading terminals at retail stations, banks & payments networks distributing chips, alternatively telecom carriers rolling out payment services will not happen overnight. But we have gotten to a point where it looks like we may get an adoption of winning technology soon.
Comments
Hi Shree:
First of all, please allow me t congratulate you on the crisp yet good insight into the M-Commerce domain.
However, one point which you touched upon is a growing risk for the e-commerce retailers: Fraudulent transactions.
Its much more difficult to track a mobile internet device for its actual owner details/device fingerprint for a thorough Fraud Check. Would be grateful if you could share your experience in this aspect
Thanks, ashu
Commented by: ashutosh | October 25, 2010 5:33 PM