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WirelessDevNet.com Press Release
Mobile Payments: Death of Cash and the Credit Card?
Dublin, Ireland - 23 September 2004 - Representatives of the mobile and financial industries met this week in London to discuss the impact that mobile payments will have on established transaction methods including credit cards and cash. During the roundtable, hosted by Valista, leading figures (see below) from Mastercard, Vodafone, Orange, Simpay and O2 concluded that there is an important distinction between mobile payments as a mechanism to compete with credit cards and as a tool to release the value of mobile content.
MOBILE MICRO PAYMENTS VERSUS CREDIT CARDS Panellists highlighted that the content industry has created the need for new payment methods over mobile. Credit cards were not designed for the small transactions or "micro-payments" that characterize the mobile content market, which includes ringtones, songs, games and movie clips. According to Susie Lonie, senior product manager commercial relationships, Vodafone UK, "We are not trying to compete with credit cards and we couldn't if we wanted to." She explained that the motivation for enabling mobile payments is to make the mobile phone central to the user's life by delivering a wide range of compelling mobile services that are easy to buy.
David Birch of Consult Hyperion elaborated on this point. He explained that when we talk about the credit card, we are actually talking about several different payment elements wrapped up in a single term. He argued that we need to be very clear which element we are referring to when we talk about the death of the credit card - the physical plastic card, the card account or institutions like Mastercard and Visa.
Instead of replacing the credit card, mobile payments will evolve in two directions: managing transactions for small digital purchases and, in the long term, being integrated with credit cards so that phone users can trigger a larger credit card purchase from their phone. In this way mobile payments will complement, not replace the credit card model.
OWNING THE CUSTOMER
Although the issue of who owns the customer is frequently debated by the mobile and payment industry, the panellists agreed that it should be posed differently, as in reality no one owns the consumer. Instead the question is, who is responsible to the consumer?
Oliver Steeley, vice president product management at Mastercard International was adamant on this point, "I am the customer and no one owns me in commerce. I decide who I do business with based on the services on offer." Andrew Bud, chairman, mBlox and vice chairman, Mobile Entertainment Forum, concurred with Steeley and explained that the EU's current consultation on its emoney directive will clarify ambiguity in who is responsible for refunding customers when necessary. This issue has yet to be resolved, as reflected by a conflict in opinion between panel members. Tim Jones, CEO Simpay, stated that the customer's primary relationship was with the retailer for a purchase and that the operator as the billing entity was a legitimate second line of customer service.
Jean-Benoit Van Bunnen, head of billing and payment enablers, Orange Group argued against this view, stating that in a number of cases the mobile content retail brand is not recognisable to end users and often lacks customer support.
THE FUTURE
Looking to the future, all panellists agreed that building consumer trust is critical to the success of mobile payments. There was consensus that this could be built through strong branding. It was felt that Simpay could play an important role in achieving this by reassuring users of the security of mobile payments and delivering simplicity, ease of use and "invisible" technology for micro-payments over mobile. It was also felt that there is still work to be done in the development of the handset for mobile commerce. Handsets need to evolve to become, according to Jones and Steeley, "mini-PCs", more suited to accessing mobile content.
Summing up, Raomal Perera, CEO of Valista, looked at the evolution of mobile payments in different territories and economies worldwide. He argued that mobile micro payments for people on the move are "an excellent method of payment that solve different problems in each area where they are being used. NTT DoCoMo was thought to be a Japanese phenomenon, but the same model is appearing all over the world with the US showing increased demand fuelled by the pull of content and the success of the iTunes model. Developing countries, with less advanced infrastructure, like the Philippines, have adapted mobile payments to meet their need for small top-up increments for pre-paid users and in some countries mobile payments are being used to authenticate payment so that merchants do not have to travel with cash, protecting them from the danger of robbery and fraud."
PARTICIPANTS IN THE ROUNDTABLE:
Raomal Perera, CEO, Valista
Declan Lonergan, director wireless research & consulting, EMEA, Yankee Group
Jean-Benoit van Bunnen, head of billing and payment enablers, Orange Group
Susie Lonie, senior product manager, commercial partnerships, Vodafone UK
Mike Short, vice president, O2 and chairman, Mobile Data Association - Oliver Steeley, vice president, product management, Mastercard
Tim Jones, CEO, Simpay
Dave Birch, director, Consult Hyperion
Giles Babinet, CEO, Musiwave
Andrew Bud, executive chairman, mBlox and vice chairman, Mobile Entertainment Forum
Chris Beukers, senior vice president - international, Valista
Cyprien Goddard, European business development manager, Valista
John Hurley, vice president - marketing, Valista
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