Tuesday, February 22, 2011

Mobile Payments Boosts Ecosystem Value

Mobile and fixed service providers these days continually face the challenge of adapting their services in ways that preserve or create significant roles in the Internet, application, broadband access and voice ecosystems. In that regard, mobile payments and banking are significant precisely because those sorts of services are amenable to leverage.

In other words, service providers have other assets they can bring to bear that offer a substantial role in the creation of value, and presumably, therefore, a substantial role in revenues and profit within the ecosystem. It isn't that mobile banking and mobile payments cannot be offered "over the top," as virtually all other applications now can. It is rather that mobile service providers have existing assets to leverage, typically described as including active billing relationships with hundreds of millions of customers.

“Google’s massive, but Google does not have a billing relationship with 99 percent of its customers,” Deutsche Telekom Chief Technology and Innovation Officer Ed Kozel said in an interview last week. “That’s our opportunity.”

Also, some ways of conducting mobile banking and payments make use of text messaging, a service mobile operators largely control. In principle, mobile service providers also have billing systems set up to handle micro-payments, a potentially significant part of the overall mobile payments business.

Tablets also represent an opportunity. Online or virtual goods payments are growing in volume, and tablets should provide a richer environment for that sort of activity, especially as tablets develop as significant platforms for gaming and content consumption.

By some estimates, the retail mobile payments business could account for a third of the $1.13 trillion global market in mobile transactions by 2014, according to IE Market Research. Note the obverse, that other transactions will represent two thirds of mobile activity.

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