And they say a week is a long time in politics. On current evidence, the same is true where mobile payments are concerned. The last seven days have seen a raft of announcements regarding new products, technology trials, strategic investments in start-ups, and hopelessly optimistic market-growth forecasts. Oh, and a sneak-peek on a casing that can turn Apples iPhone into a contactless-payment device. But amid all this noise, is there anything actually worth listening to? And more importantly, how can banks attune themselves to picking out the right notes rather than being overwhelmed by a deafening wall of sound?
The trials and tribulations of mobile payments
Outside of the legal and pharmaceutical arenas, Ovum is hard-pressed to think of another industry where the word trial crops up as frequently as when it is used in conjunction with the evolution to mobile payments. Exercises to investigate the technical and commercial feasibility of such services have long been a feature of the retail-banking sector so it is difficult to get excited about another experiment involving multiple parties hoping to learn the secrets of mobile-payments alchemy. Frankly, it has reached the point where a trial is just another notch on the proverbial post.
The latest in a long line of experiments will see MasterCard use a miniature SD card from Gemalto that can be attached to a SIM to convert handsets into contactless-payment devices using single-wire protocol (SWP). Singapore is the country chosen for the pilot project, which will also involve DBS Bank, Ez-Link (a prepaid card specialist), and StarHub (a telco). If history is anything to go by, this trial will produce some interesting and possibly even valuable results for the organizations involved. MasterCard is already talking about providing a path for ubiquity for contactless mobile payments. In our view such grand proclamations are a little premature, not least because of the paucity of NFC-enabled handsets using SWP. While theres no harm in future-gazing, banks should pay attention to whats actually going to affect or benefit them in the near term. Trials do not fall into this category, but this will not prevent a steady flow of further experiments.
Filtering out noise to find the interesting developments
Trials aside, there have been some noteworthy developments in mobile payments in the last seven days. In the US, Obopay revealed a white-label proposition that will allow institutions to launch branded mobile-payments services. Having learned several valuable lessons from its commercial relationship with Citibank that ended in December 2009 after a three-year test, Obopay has reinvigorated its portfolio with four new products under the Mobile Money for Banks umbrella.
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