M-payment services need partnerships


Joint ventures and collaboration among market participants are seen as the key market drivers for the m-payments market, according to Frost & Sullivan. Joint ventures established between major telecom operators and financial institutions aim to employ both parties' expertise for developing and promoting m-payment services, said research analyst, Jayashree Rajagopal, author of a new analysis 'European M-Payment Update'.

'With joint ventures, market participants can leverage their brand name across diverse industries to create awareness of m-payment services,' said Rajagopal. 'Similarly, regional factors such as the level of credit/debit cards usage in a particular country have to be considered when developing alternative payment services aimed at increasing customer adoption.'

In certain cases such as micro-payments for telecom operators and point of sale (PoS) for payment providers like Visa, initiatives have not involved other market participants since the companies are aware of the dynamics of the respective segments.

The major platform currently used for m-payment services is SMS, however near field communication (NFC) usage is increasingly prevalent in the retail and transportation sectors. NFC is expected to develop into a strong platform that helps retail stores adopt m-payment services. 'When adopting a new payment-related technology, the major factors considered are the complexity of business models/transactions, degree of security/privacy needed, ease of use for customers, ecosystem readiness, and costs involved,' adds Rajagopal.

So far, one of the reasons for the slow roll out of m-payment services has been the absence of defined business models. The limited focus on developing business model coherence – even during m-payment trials – and the lack of awareness and customer retention strategy tarnishes the lustre of most services after the initial splash.

Although a number of partnerships have been announced, business models have often not been clearly defined due to issues such as revenue sharing requirements. Moreover, the fragmented approach of the market participants has resulted in low awareness of m-payment services.

'The success of m-payment services will largely depend on repeated usage of such services,' noted Rajagopal. 'To achieve that, service providers need to encourage the use of M-Payment services through mobile customer relationship management (CRM) that include mobile vouchers and loyalty cards.'


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