Editor's letter: m-payments - no competition
By James Ratcliff
06 October 2011
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".
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 mobile
looks 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.
Luup, 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