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Making money from mobile

The march of the mobile wallet is gaining pace. April has seen Barclaycard roll out contactless stickers that can be attached to mobile phones held by UK Visa credit card customers. Meanwhile Ebay is promoting its plans to lead the mobile payments race with PayPal, and most recently O2 has launched a smartphone app that allows users to transfer up to £500 via text message.

The big players are scrambling to get their offering into the market first to claim ground before the mobile wallet hits the mainstream market. But it seems that the desire to be seen as having a mobile offering is being put ahead of the need to really work out how it will be monetised.

Of course the bank or financial institution will get a transaction fee like in all other payment channels, but what does the telco get out of it and why should retailers care? It’s a complex ecosystem where it’s not clear which business model will win. After all, a transaction fee can only be carved up so much before the ROI is not worth it.

So, how can mobile payments be profitable in the long run? I’m not going to answer that question here, however one view that’s being discussed, particularly by retailers, is the idea of using the customer data to add value.

Every time someone makes a mobile payment, information about purchases, preferences, locations and any other amount of information can be captured. And we all know that data – if analysed and understood - will create knowledge and insight. Retailers are already very good at analysing customer data with their loyalty programs and then pushing sales and making compelling offers. But banks are also in a good position here. Banks have all the transaction data related to their issued cards, and a number of us rely on one bank alone, for all of our cards. This is a lot of valuable information and I’m sure banks are realising that this presents a significant opportunity. Some banks may be already using data to monetise their mobile payments service.

So, the real question becomes, who is going to take the lead? Who will step in first and use this data to drive real value for customers and then create a reliable revenue stream for themselves, the banks, the telcos or the retailers? Or will they join forces to maximize information? Will data protection be an issue in the quest to fully monetise mobile? I’ll leave that thought with you, but it seems to me that we’ll need an answer soon.


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