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Muddy waters: future of mobile payments as unclear as ever

Recent news that Isis, the US telco-based mobile payments platform, is growing at a rate of 20,000 users a day, was welcomed as validation by the cheerleaders of mobile banking. For the rest of us – those of us who just want to see more customer-friendly financial services by whatever means works best – the Isis news merely confirmed that mobile payments technology has the potential to help achieve this.


Quite apart from the fact that Isis seems to have been used to ‘pay’ for many things that are actually free, it’s not at all clear how the competitive landscape for mobile payments will develop in the near future. Anything that makes it easier and faster for consumers to get through their day is to be welcomed. But, until it can be relied upon to be available in the majority of situations, no one system is likely to gain market dominance.


Isis is a rare instance of legacy service providers stealing a march on the digital leaders, but the first-mover advantage may not last long. As some industry watchers have pointed out, Google’s support for the software-based Host Card Emulation means that it can by-pass the telcos, and it could use its ties with handset manufacturers to push adoption of the protocol. Ripple is another system with a great deal of potential but, with so many alternatives, it can be hard to tell what is a real glimpse of the future, and what is just hype.


If banks are to remain an integral part of the payments ecosystem, then they cannot afford to be dazzled by new technologies and emerging protocols. Indeed, there are considerable opportunities waiting to be taken. In spite of the events of recent years, banks are still amongst the institutions that consumers trust most to look after their money. It will take a long time for new payments players to build up this level of respect, and banks should use this advantage to push themselves into the heart of the emerging mobile payments ecosystem.


A shift from batch-based to real-time processing, and better middleware integration between mobile payments facilities and banking apps mean that banks could potentially add a number of value-added services on top of mobile payment facilities. If banks can move fast enough to remain at the heart of payment technology in the mobile payment era, then the added insight into customers’ spending habits could add a valuable extra dimension to their product development and marketing efforts.


The organisations that flourish will be those that make the most of their customer data, wherever they manage to fit into the payments ecosystem of the future. Better use of data means better insight into how services fit into consumers’ lifestyles, and can inform the development of products to suit them. Mobile payments does offer the prospect of truly seamless commerce and transactions but, for it to fulfil that potential, there will need to be some consolidation in the market, and a much greater degree of merchant buy-in. Similarly, there are real opportunities for banks, if they can use the adoption of mobile payments to get closer to their customers. If banks can move quickly and flexibly to offer new products, services and partnerships, then mobile payments should present a huge opportunity, not a threat.



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