How Telefonica Deals with Mobile Data Challenges

"White board" App for iPhone

Mobile Payments Business Models: Attackers Face Hard Choices

One way of looking at the business potential for mobile payments is to look at the volume of retail payments, the volume of credit card or debit card payments, and then estimate how much of those activity streams could shift in new ways. In the U.S. market, as compared with some others, the analysis is a bit more tricky.

For starters, the payments process is well developed and efficient. But the latest wrinkle is that the actual payments processing business associated with bank cards bearing the "Visa" and "MasterCard" labels is itself in serious danger of massive shrinkage, by reason of new banking regulations that dramatically cap fees. See http://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act or http://www.cutimes.com/News/2011/2/Pages/DoddFrank-Regulatory-Overhaul-Likely-To-Get-Tweaked.aspx.

Deutsche Telekom CTO Ed Kozel says the business model is still in its formative stages, especially in the United States. "Nobody knows what the final version will look like; everybody is still experimenting with their business model," Kozel said. "Will it look like Visa or something else?"

So here's the big and immediate rub: in a payments ecosystem that is efficient, adding one more player either reduces the overall industry revenue, or raises costs to retail partners. On the other hand, if a new player tries to create a new system, displacing or eliminating some participants, there is the obvious problem of determined opposition from the existing players that are threatened.

The former strategy, though arguably prudent, makes it harder to add value to the new experience. The latter strategy means a protracted fight with stubborn foes already facing revenue pressure. Also, if some sort of accommodation with the existing order is the approach, then all the existing players are threatened if a rival and replacement system gets traction. That threat is most obvious for relatively restricted payments using Apple's iTunes or PayPal, for example. But there always is the "threat" that a niche process can improve to the point where it can become a viable substitute for the existing "card-based" system. especially if tightly and elegantly integrated with the mobile device.

Mobile Payments in US Mired in Fight for Control - PCWorld

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Are Mobile Payments Services Covered by Durbin Amendment to Dodd-Frank?

According to the Federal Register, the official publication for federal government rules, regulations and laws (Vol. 75 of the Federal Register, p. 81729, Dec. 28, 2010, the Durbin amendment to the Dodd-Frank banking bill appears to cover mobile payment devices with the same rules that apply to debit cards.

[P]roposed comment 2(f)–1 clarifies that the requirements of this part generally apply to any card, or other payment code or device, even if it is not issued in card form. That is, the rule applies even if a physical card is not issued or if the device is issued with a form factor other than a standard-sized card. For example, an account number or code that could be used to access underlying funds in an account would be considered a debit card under the rule . . . . Similarly, the term ‘‘debit card’’ would include a device with a chip or other embedded mechanism that links the device to funds held in an account, such as a mobile phone or sticker containing a contactless chip that enables the cardholder to debit an account.

If so, that would mean all the big numbers you see for mobile payments activity will boil down to about 12 cents per transaction for a mobile payment service. That's a clear dose of reality suggesting why other value likely will have to be found to make mobile payments a workable business proposition.

Digital Society Blog Archive Mobile Payments & the Durbin Amendment:

Dealing with Mobile Data

U.S. Broadband Speeds Grew 34% in 2010

The speed of residential broadband connections in the United States increased by 34 percent during 2010, according to In-Stat.

The average download speed for the broadband subscribers in the survey was 9.54 Mbps, up from 7.12 Mbps just twelve months earlier. In comparison to the rapidly rising amounts of bandwidth available to broadband subscribers, between end of year 2009 and end of year 2010, the average price for broadband service increased by just four percent.

Some 38 percent of the survey respondents also had a mobile wireless broadband connection.

The average downstream speed across all access technologies increased by 71 percent over the course of the past two years.

In-Stat - Multimedia Broadband Services Catalog

GetJar Gets Investment Round

Apple Launches Subscriptions at App Store

Apple now supports content subscriptions for all publishers of content-based apps on the App Store, including magazines, newspapers, video and music.

Publishers set the price and length of subscription (weekly, monthly, bi-monthly, quarterly, bi-yearly or yearly). Then with one-click, customers pick the length of subscription and are automatically charged based on their chosen length of commitment (weekly, monthly, etc.). Customers can review and manage all of their subscriptions from their personal account page, including canceling the automatic renewal of a subscription. Apple processes all payments, keeping the same 30 percent share that it does today for other In-App Purchases.

“Our philosophy is simple—when Apple brings a new subscriber to the app, Apple earns a 30 percent share; when the publisher brings an existing or new subscriber to the app, the publisher keeps 100 percent and Apple earns nothing,” said Steve Jobs, Apple’s CEO.

Apple Launches Subscriptions on the App Store

Deutsche Telekom Might Buy a Bank or Payment Prcoessor?

Deutsche Telekom, Europe’s largest phone company, may “have financial relationships and perhaps own a financial entity” to support its mobile payments and banking efforts, Chief Technology Officer Ed Kozel said. Kozol did not elaborate, but becoming an "issuing bank" or a "payments processor" are the logical possibilities.

Deutsche Telekom May Purchase, Partner in Payments Business To Expand - Bloomberg

Mobile Payments "Arguably the Next Major Change"

Mobile payments could account for $1.13 trillion worth of purchases globally by about 2014, according to IE Market Research.

"There is a game-changing opportunity here for the operators to effectively displace credit cards and banks," said Dan Hays, partner at global management consulting firm PRTM.

"Mobile payments are arguably the next major change in the mobile industry," said Hays.

Telcos battle tech, bank titans for mobile payments - The Economic Times

EMEA Leads Mobile Banking Activity

Europe Middle East and Africa represents 42 percent of active mobile banking users followed by Asia Pacific at 38 percent.

Yankee Group projects that Asia Pacific will have 54 percent of the active mobile banking base by 2014. North America lags at 16 percent and will continue to lag.

Mobile Transactions Ready to Ramp - Seeking Alpha