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The mobile payment market is highly complex, despite still being in low usage around the globe, new research has found.
Within its latest study, ‘Mobile Payments’, IDATE has spotlighted the mobile payment market, which it claims is complicated in terms of the technology choices available, the target markets, and also the value chain.
Sophie Lubrano, director of studies at IDATE, commented: “Mobile payment is a complex market, with many technical alternatives addressing different marketing targets based on different business models. At least, four main solutions should be clearly distinguished, of SMS-based payments, fixed-mobile wallets, appstores payment, and NFC, with regards to their contrasting potential and competition landscapes.”
“The complexity is also coming from the value chain; the mobile payment market brings together major players, which are all leaders within their core businesses, such as card issuers, mobile operators, handsets manufacturers, retailers, internet giants, and also start ups. And currently usages are still low,” Lubrano added.
The m-payment market can be segmented into four main domains, each with specific issues and very different competitive landscapes, Lubrano said: SMS-based technologies which are premium SMS platforms or money transfers via SMS for underbanked people; extension of fixed wallets such as Paypal or Amazon checkout services on the mobile; payment on mobile applications storefronts; And NFC payment.
In this complex market, competition
involves major players, which are all
leaders within their core businesses,
the research claimed. These players
can rely on their customer bases,
which contain millions of accounts and
that sometimes include bank details
such as card numbers. For instance,
Apple handles around 100 million
iTunes accounts, Visa Europe has
issued 380 million cards, and Amazon
manages 114 million active customers.
Each type of player is positioned on different markets: mobile operators have the widest range of services; internet giants provide essentially fixed-mobile wallet services, with an extension to application storefronts (Google in particular); Apple payment solution relies on iTunes accounts (fixed/mobile wallet and App Store); cards issuers focus on NFC, as well as retailers; start-ups have also a wide range of services, but not on the NFC market.
Between the four main solutions distinguished (SMS-based payments, fixed-mobile wallets, app stores payment and NFC), three of them are clearly controlled markets, the research showed.
It said the SMS-based market is less competitive, as mobile operators rule here. It could be a cash-cow market for operators generating high margins, and it is growing rapidly in emerging countries.
In the mobile wallet market, the competitors are the same internet giants that dominate the fixed online payment market: PayPal; Amazon; and Google. As for application storefront payments, it is fundamentally an OS battle between Apple, Google and Nokia in a narrow market. In developed countries, key developments for those markets are not coming from the mobile payment which is just an additional enabler, said the research.
Lubrano added that NFC payment potential is huge, as it has the potential to address the specific requirements of the retail payment market. However, competition is fierce between players as most are leaders in their core markets: card issuers; mobile operators; and retailers.
She said: “We believe that the development of contactless services (ticketing, loyalty-programme management, access control) will help to drive mobile NFC payment. There are also some positive signs regarding the development of NFC compatible handsets; Nokia's announcement, as well as alternative ways to emulate NFC such as the MicroSD card.
“To conclude, although value sharing remains a sticking point, mobile operators have started to build partnerships with financial institutions, like in the US with the m-payment joint venture between AT&T and Verizon, and T-Mobile has partnered with Discover Financial Service. The business model is still to be defined, but the market is large enough to foster partnerships.”