It’s the final day of Mobile World Congress 2012. According to reports, over 67,000 attendees from 205 countries swung by the biggest mobile phone conference in the world, and we certainly saw a few of them at our stand.
As one of our final blog posts on the show we wanted to share some insights on mobile money and how to deliver innovative mobile payment services. Our CEO, Olivier Piou, spoke on this panel today, alongside Google, Payfone, PayPal and Visa. Given recent news that China is set to reach 1 billion mobile-phone subscriptions this week and that mobile devices will outnumber humans by 2016 according to Cisco, we can expect a lot of growth in mobile payments. The main focus today was how service providers can continue to look for new ways to facilitate payment transactions in a secure and convenient manner. These industry leaders discussed the latest innovations as well as the challenges the ecosystem faces to implement them, and also what the critical success factors are.
As the first speaker, Olivier Piou set the scene: mobile payments are but the tip of the payments iceberg. The cost of cash is significant (making up 0.5% of the EU’s GDP – €84 billion) so innovative payments, such as via mobile devices, are welcome. NFC technology can accelerate the adoption of mobile payments. With fast NFC Point of Sale (POS) deployment thanks to the roll-out of contactless cards and with NFC phones reaching mass market, there are few obstacles in our way. We’re adding convenience and context with our TSM services to bridge the world of Mobile Network Operators (MNOs), banks, governments and other service providers.
We believe that 2012 is the year of widespread NFC roll-out and the proof is there too: 45 of the world’s leading MNOs have committed to SIM-based NFC deployments. This is a major growth and transformation opportunity for banks, retailers as well as MNOs. However, Olivier also touched on some of the remaining challenges. On the technology side we have converged, but on the consumer side there is still a lot to be done, and there are very different attitudes and trends in different countries and global regions.
This is a topic that Bill Gadja, Head of Global Mobile Product at Visa, picked up on, differences between developed and developing countries. Serving consumers in developing markets, the opportunity lies in replacing cash and Visa is working with Orange Money to offer prepaid options. In developed markets, on the other hand, the next generation payment solution is a sophisticated, cross-channel digital wallet which has taken ten years to develop because it requires an ecosystem approach.
On the security front, Rodger Desai, Payfone outlined a frictionless checkout experience. With a mobile phone and Payfone’s solution, your mobile knows who you are as the SIM authenticates the mobile device on the network. This means that the consumer doesn’t have to enter multiple sets of information every time they make a mobile purchase. This is how MNOs can ensure the consumer has a convenient experience, as they are the ones who authenticate their subscribers.
David Marcus, VP/GM, Mobile PayPal also sees mobile payments as a key growth area, however, PayPal is less focused on NFC than other players. While they are experimenting with it, they consider it just another technology and do not want to depend on it to drive their growth. PayPal’s payment philosophy focuses on security, simplicity and innovation, which works. In 2011 the company achieved $4 billion in mobile payment volumes, and have almost double that figure projected for 2012 across 106 million PayPal users.
Of course, we cannot discuss NFC and mobile payments without making a reference to Google. It was interesting to hear from Osama Bedier, VP Wallet & Payments, Google, who said it is still early days and that Google is continually learning to build an improved wallet and to connect all the dots. Google isn’t as interested in payments as in the technology to improve the measurability and thus the effectiveness of advertising. Over $30 trillion is spent by consumers globally on retail but only 5% of this is online. However, 50% of purchasing is influenced by online activity and Google’s goal is to enable consumers to easily find relevant offers, save them to the Google Wallet and redeem coupons at retailers.
Ultimately, there’s a lot happening in the world of mobile payments, mobile money and NFC. Our industry hasn’t handled the upgrade of the POS infrastructure that well, so, while the service Square, allowing anyone to accept credit cards anywhere, provides a short term solution to this, we do need to find solutions to ensure the long-tail opportunity. Mobile payments will become affordable enough to replace cash payments – in the words of our CEO, Olivier Piou, MNOs have very efficient billing systems in place, and this is how they can also retain that all important customer interface during these changing times.