Cross-industry co-operation, standards development and business models are all important, but consumer trust remains the key
There has been a lot of recent activity in the Mobile Payments space, with many pilots and live applications being launched around the world. The attraction of mobile payments is unquestionable for many players.
For financial institutions mobile payments are a potential method for protecting the current account and surrounding loan products.
For Mobile Network Operators mobile payments are an attractive proposition for achieving a return on the investments made in infrastructure over the last two decades. They also hold the possibilities of allowing for diversification into other areas of the consumer's needs and lifestyle and reducing churn.
For merchants, Point of Sale mobile payments could provide faster throughput at the checkout and the ability to send real time marketing messages to the consumer.
From the perspective of the end consumer, the mobile phone has achieved ‘permanent share of pocket' and consumers are increasingly more comfortable with the mobile phone fulfilling more than one function.
One of the commonly cited reasons for the relative lack of success of mobile payments so far has been the absence of productive cooperation between key stakeholders, namely the financial institutions and the mobile network operators. Without the creation and usage of standards for mobile payments the industry risks the development of non-interoperable islands of pilots and solutions. This report describes some of the prominent attempts at standardisation including the GSMA, Mobey Forum, the NFC Forum and EMVCo.
Mobile payments are 'hot" and several different business models for the delivery of mobile payments can be seen in the market. The service is expected to deliver added value for consumers, merchants, mobile operators, financial institutions and other participants in the ecosystem. A good user experience will drive the uptake of mobile payments but several key issues need to be addressed. Our analysis of mobile initiatives around the world reveals the following barriers for the adoption of mobile payments:
– Complex value chain with lack of co-operation
– Lack of interoperability/lack of technology standards
– Complex and varying financial regulation
– Security/risk (perception of security/risk)
– Cost
– Lack of availability of a broad range of mobile payment capable handsets.
A new analysis of the mobile payments opportunity forecasts that the gross transaction value of payments made via mobile phone for digital goods (such as music, tickets and games) and physical goods (typicallygifts and books) will exceed $300bn globally by 2013.
A region by region analysis by Juniper Research found that there is a significant and immediate opportunity for mobile payment services, systems, software and supporting services to underpin the processing of this value of payment transactions by 2013. With applications and service case studies, the study explores how the mobile phone is developing into a payment tool that will be used by more and more people, more and more often in future.
Report author Howard Wilcox noted: "Merchants in North America and Western Europe are just starting to realise the potential of a mobile web presence as a fourth channel to market. Retailers should be evaluating the benefits of the mobile web, and be mindful of the success of regular ecommerce sites in generating sales. They need to move quickly to exploit the opportunity presented, and ensure that they maintain ease of use for their customers who are already familiar with web shopping from their PCs."
The report finds that global annual gross transaction value will grow over 5 times by 2013; The ticketing segment will be driven by consumer usage on rail, air and bus networks as well as sports and entertainment events. This will represent over 40% of the global transaction value by 2013
The top 2 regions (Far East and W. Europe) will represent over 60% of the $300bn p.a. global mobile payment gross transaction value by 2013 for digital and physical goods
Western Europe is currently dominated by digital goods and services sold via SMS, whereas the Far East & China region (specifically Japan) is already well established in physical goods sales over the mobile web, and has been for a number of years.
Yet 71 percent of all consumers surveyed in 14 countries will not consider using a mobile device to bank or shop online, according to a study released by Unisys Corporation.
The research, also reveals that more than half of all respondents (59 percent) do not trust their mobile devices to provide a secure transaction. Moreover, only 9 percent currently use these devices to conduct transactions involving credit-card payments, money transfers and deposits.
Unisys surveyed 13,296 consumers worldwide in March 2008 about their mobile-device habits and how secure they feel when conducting online transactions. The results indicate a widespread apprehension about the security of mobile devices and their ability to protect pertinent information relayed in a financial transaction. Other key findings:
– Consumers most reluctant to use a mobile device to bank or shop online include: France (86 percent); U.K. (79 percent); Australia (78 percent); Belgium and Italy (both at 77 percent); and U.S. (71 percent).
– 21 percent of German respondents currently use a mobile phone or personal organizer to conduct financial transactions, representing the highest percentage of any country or region included in the survey. U.K. respondents have the lowest percentage of consumers using mobile devices to bank or shop (1 percent).
– At least half of all respondents in each country or region – with the exception of New Zealand (45 percent) and Malaysia (49 percent) – do not trust their mobile devices to provide a secure transaction.
– Most consumers generally perceive banks as having the best security for mobile transactions when compared to telecom providers and online retailers. However, trust of banks vary greatly from country to country; for example, Italian respondents are twice as likely (72 percent) to trust a bank to secure an online transaction via a mobile device as respondents in Malaysia (38 percent).
"Despite unprecedented growth in the number of cell phone users and the advancement of mobile technologies, telecom providers, online retailers, and financial institutions seem unable to convince consumers worldwide that a secure platform exists for conducting online mobile transactions," said Tim Kelleher, vice president of enterprise security at Unisys. "There is a great deal of money to be made in mobile payments, but only when consumers believe that the security of the transaction meets or exceeds the freedom of using mobile devices.
Ray Anderson, CEO of Bango, whose company processes mobile payments, says, "There are a few rogue mobile content vendors who have been bringing down the reputation of the industry with bad practices that are blatantly designed to con the consumer. The UK mobile payments standard, Payforit was created to catch these bad practices by making it much clearer what the consumer is paying for, with the option to cancel at any time. It's good news for all us in the mobile content business that these rogue vendors are finally being investigated and hopefully will either shut down or be forced to change the way they sell their services."