Two announcements on top of each other mark the real beginning of the Payments Game, in which telcos will compete on a different level and in a different, multi-player, game for the first time.
Deutsche Telekom picked Mastercard for its attack on the payments world, with plans to roll out a major payments programme. Its first target is Poland, followed by Germany. The DT solution will be based on mobile phone tags and cards and a mobile wallet service being planned for early next year – essentially paving the way for NFC.
Meanwhile Telefonica Digital, the R&D arm of the telecoms giant has gone with Visa (and Facebook, Google, Microsoft and RIM) to offer carrier billing to its 309 million customers. The Telefonica move is bold and will place them front and centre in the Game. Carrier billing is widely seen as being the most intuitive and easiest payment method and makes the most money for a carrier. Already almost a third of European smartphone owners have used operator billing, according to research commissioned by MACH, and in Germany alone this number is reaching half a million.
There is also no question that the money is in the app, however cheap or free that app may be. Advertising, promotions, coupons and special offers wrapped up in the app in which customers are immersed is a compelling, intuitive notion – and likely to be huge.
Just to add a little complexity to the situation, as Computer World (UK) points out, each of Telefonica’s ‘Beyond Connectivity’ agreements is slightly different. Facebook has integrated operator billing into its existing platform, whereas the others will add it to their app stores later.
It will not be a simple Game and there are many questions that need answers. One such is ‘wallet portability’ as discussed by Mobile Payments Today, who point out that:
‘we have not yet reached the stage of ‘wallet portability’ (i.e easily porting your stuff from a Google Wallet to an O2 Wallet, for instance).
And that is a major concern to mobile service providers, who have already been subject to a shift in loyalty from operator brands towards device brands.’
As the author says, Apple has turned loyalty on its head. Whereas ‘Before Apple’ you would go to a phone store and look at the pricing options before picking your phone, now you ask for an iPhone or Galaxy and then ask what network comes with it.
Talking of Apple, they are, as usual, biding their time and, Napoleon-like, ‘not interfering while their enemies are busy making mistakes.’ The Wall Street Journal spotted this and examined why Apple is only dipping its toes in the payments game. After all,
‘The company has sold more than 200 million iPhones and has some 400 million credit-card accounts registered with its iTunes store.’
This is not a bad vantage point from which to launch a payments platform for, well, all your purchases, nor indeed a bad vantage point from which to launch a communications service provider (did I just say that?). After all, as Nick Holland of the Yankee Group, says, “What they essentially have is everything you would store in a physical wallet apart from the cards.”