What is a mobile payment? It is a question I asked 100 or so people at Sibos this year and there is no singular answer. Are we talking about a fundamental change in the way payments are processed, or is it simply a change in form factor?
At the launch of the Capgemini World Payments Report 2011 RBS global transaction services CEO Scott Barton said "the dominance of cards as the biggest instrument in non-cash payments was under threat from mobile".
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
His statement is valid if the card is defined as the thin piece of plastic beloved of wallet designers. But if we broaden that definition as we should to encompass smartcards, chip technology, or even to all transactions processed by card networks the predicted dominance of the mobilelooks less like a threat and more like an opportunity.
According to a white paper commissioned by Vesta and Informa, m-commerce will turn into an industry with revenues of $22.5bn by 2013. And the World Payments Report predicts the volume of m-payments will grow from 4.6 billion transactions in 2010 to 15.3 billion in 2013 a 232% increase. But these figures include NFC card transactions initiated on mobile devices. For me, the truly exciting thing about mobile payments is its potential to take on the card networks with real-time, no-fee ACH payments.
Mobile wallet functionalities will drive this m-commerce opportunity because mobile operators can use their existing experience in prepaid charging, content purchase and billing to develop new services.
There is already an extraordinary amount of activity in mobile commerce.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataLuup, which made quite a splash at Sibos, enables mobile P2P payments. It is following a dual strategy, selling P2P services to retail banks and bill presentment and payment solutions to corporates.
Google Wallet the most gung-ho foray into mobile payments was launched in conjunction with MasterCard and has been licensed by Visa.
But these emerging m-commerce players cannot go it alone. There is the acceptance problem. The benefits on the billing and m-banking side are clear, but the transformation of this m-commerce potential into a prolific business case is still far off due to the lack of merchant acceptance.
The current mobile services are not yet positioned to become the dominant method of payment at the point of sale because retailers are behind the curve in the migration to alternative payments.
It is difficult to imagine retailers moving on from tradition to innovation any time soon.
Integrating P2P mobile commerce into the retail chain is a long way off yet. But the extraordinary activity in mobile payments can only benefit card schemes and, maybe, in 10-20 years m-payments will be common.
James Ratcliff
james.ratcliff@vrlfinancialnews.com
