Mobile Payment Value Chain and Business Models

•Concept•Business Model•Reality Check•Technology

Disclaimer: Any views and/or opinions expressed in this publication by individual authors or contributors are their personal views and/or opinions and do not reflect the views and/or opinions of their employer.

Mobile Payment is not a new concept and industry is littered with failed launches of mobile payment platforms. To be successful, companies will need to find solutions to alter consumer spending habits.

Concept

Most of the mobile payment platforms fall into four categories -

•Mobile Banking: This will enable users to transfer money from account to account, pay bills, manage/monitor account e.g. spending limits, credit fraud. Its success depends on the ease-of-use and robustness of the platform and the capability to aggregate accounts from multiple financial institution. e.g. Mobile banking platform providers - mFoundry and Firethron.

•Remote Purchase: Using the mobile phone to purchase goods through a secure portal, instead of a computer on the internet. e.g. PayPal’s "Text-to-Buy" enables users to make remote purchases.

•Person to person mobile payments: Where a mobile device can be used to complete a person-to-person transaction. In my humble opinion - it’s a useless concept.

Point-of-Sale: Using a mobile device at a physical store front, at the cash register to purchase inexpensive products quickly and easily. “Almost useless“. Thankfully cost of implementation and standardization issues will kill this before you finish reading this presentation.

Concept

Operators’ involvement

Banks’ involvement

Independent serviceprovider models

Low

Business Model

High

High

Low

Collaborative ModelsBank-Centric Models

•Point-of-sale NFC payments•Mobile Banking - Multiple BanksCustomer->Bank->Vendors

Operators

Customer->ISP->MerchantsOperators

Customer->Mobile Operator->MerchantsBanks

Operator Centric Models

Reality Check: What's in it for me?

•End Customers - Not much

•Operators - They have fared well in becoming part of mobile commerce transactions where the items being sold are delivered on the mobile devices (Ring tones, wall papers, etc..). Most of the discussed payment systems do not benefit an operator beyond driving increased usage of SMS and data services. Revenue share model from Near field communication (RFID) payment would be a challenge.

•Merchants and Vendors - If already registered on eBay, merchants may provide remote purchase or text-to-pay but brick-and-mortar merchants will need to see reduced transaction and implementation cost, and access to precious customer data to track spending habits.

•Technology Vendors - Opportunity to sell mobile payment products and expert advice to operators and financials institution. Independent service providers will have to establish trusted brands before they will ever get any money.

•Device Vendors - Opportunity to sell mobile payment products and expert advice to operators and financials institution.

•Financial institution- Financial transaction fees

All the players in the entire value chain must work toward an easy-to-use interface.

Change = f (User’s Crisis v user’s Total Perceived Pain of Adoption)

Crisis

Indifference Low

http://www.coburnventures.com/About_CHANGE/The_Change_Framework.html

Crisis TPAA

Mobile BankingRemote PurchasePoint of SalePerson to Person

Person to PersonPoint of SaleRemote PurchaseMobile Banking

High

Reality Check: The Change Framework

Mobile Payment Technologies

Near Field Communication (NFC) is an evolution of contact-less and short range RFID technologies.

•Its based on existing RFID technologies (ISO 14443 A and Sony FeliCa)•Working distance of up to 10cm

•RF technology by Philips and Sony, standardized in ISO (NFCIP-1 = ISO 18092)•Suitable for fast and convenient “swipe” transactions and impulse transactions (vending

machines, ticketing, parking, etc.)

SMS:Cons: Biggest challenge for mobile services based on SMS system would be inter-operability between competing services and security. Pros: familiarity with SMS functionality.

Over the air data connectivity: Https, SSL, web browser, XML. Security is comparable to the internet model.

http://www.mobiletransaction.org

Industry Initiatives

http://www.mobilepaymentforum.org

http://www.mobeyforum.org

http://www.openmobilealliance.org