Partnerships need to be part of successful mobile payment strategy, says Frost & Sullivan

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London, UK. August 1, 2012 – Near field communication (NFC), the promising mobile (m)-payment technology, has not created the revenue-generating opportunities the telecom industry expected. So says, a new report from analysts Frost & Sullivan.

It goes on to say that new marketing strategies are crucial to accelerate wide consumer adoption. Recently established partnerships between telecom operators and major financial institutions are also an effective way to deploy m-payment offerings.

“The industry seems to be reaching a tipping point,” says Jean-Noel Georges, global program director for ICT in Financial Services at Frost & Sullivan. “A number of factors like more NFC-ready mobile devices and new market participants are favouring the development of the European m-payments market — especially NFC-based payments. Market players are forging cooperation, where a telecom-financial services partnership is one of the most compelling strategies.”

Component vendors, mobile device manufacturers, and mobile operators have plans for introducing more NFC-enabled mobile devices to the market. Moreover, the m-payments sector is becoming more dynamic with the entrance of software providers, payment platform providers, and over-the-top companies such as Google.

“The entrance of new market participants has had a twofold effect,” comments Mr. Georges. “It constituted a first step in modifying the market’s structure with innovative and disruptive technologies and business models, and it incentivised financial institutions and mobile operators to push ahead with strategies for m-payments or risk being left out.”

PayPal’s entrance into the m-payments market is a noteworthy example, from Frost & Sullivan’s perspective. The cornerstone of PayPal’s offerings, which include m-payments, is to bring together the online and offline payment worlds. Closing the gap between online and offline commerce is not only attractive from a business standpoint but also a compelling value proposition to end users. After PayPal launched its digital wallet, major payment schemes launched similar services.

Starting this year, companies involved in the m-payment market have demonstrated a marked change in their strategies for commercial NFC rollout. Market participants are forming partnerships that will accelerate the deployment of m-payment offerings.

Last month, DT and MasterCard signed a partnership agreement to bring m-payments to DT’s 93 million customers in Europe. DT will issue MasterCard’s branded products through its subsidiary ClickandBuy, which owns an e-money licence. The partnership envisions the launch of m-wallet service in Poland during the second half of this year, followed by the launch of the m-wallet in Germany during the first half of 2013.

“DT was wise to select Poland – where 20% of Point-of-Sale terminals are contactless enabled and that percentage is expected to increase to 40-50% by the end of 2013 – as the initial focus of its wallet,” notes Jean-Noel Georges.

“This type of partnership is cost-effective: the partners involved avoid ‘reinventing the wheel’ by using the capabilities and know-how of their counterparts, which may result in a compelling offering,” advises Georges. “More importantly, telecom-financial services partnerships deliver a positive signal to the market: different industries are finally finding a way to promote a payment solution. This market is steadily moving towards maturity through partnerships and merger and acquisition activity.”

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