Until recently, the general consensus was that banks, Telcos, merchants and consumers all needed to collaborate before Mobile Commerce (mCommerce) would take off. It was going to be hard, because no one could decide who owned the customer, which business models would work, and which technologies would be the ones to create a lasting ecosystem.
Now we know that the opposite is true. It’s not that everyone has to collaborate before mCommerce would take off. It’s that mCommerce had to take off first, after which the players will engage in some competition to determine who controls what. Following that, we’ll start to see some collaboration.
In the last few years, a few important things happened:
1. Banks began offering mobile banking initiatives.
2. Smartphones, especially iPhone, have been wildly successful in consumer and business markets.
3. Mobile device applications, like those on the Apple’s App Store, have created an opportunity for brands and merchants to connect directly to consumers via the mobile channel.
4. Many merchants started offering their own mCommerce solutions: Amazon, Apple, eBay, Starbucks and Target.
So now the situation is that each ecosystem player is forging ahead with its own mobile commerce plans, especially the merchants. Here’s a remarkable figure: iTunes has at least 200 million customers on file with attached payment instruments. Amazon is attempting to do the same with its Appstore for Android, and will certainly try to leverage its existing base of customers.
So what about the Telcos?
All this time, Telcos in the U.S. market have been relatively quiet, focusing on selling smartphones and their associated plans. They have continued to use PSMS (premium SMS) billing as a means to charge via the phone.
But overall, Telcos, who entered the game with the most number of customers, are now the farthest behind in offering any new mobile payment initiatives. It’s safe to assume they’re hard at work to catch up, given the recent announcement about ISIS, a joint venture between AT&T, T-Mobile and Verizon, to launch NFC payments in the U.S.
At this point, the U.S. Telcos really only have three options:
1. They can tackle NFC payments (given they control distribution of phones),
2. Have a mobile wallet offering, and/or
3. Expand the use of billing to the operator’s monthly invoice (which has risks associated with it).
However, success in mCommerce comes from offering compelling services, not competing on yet another payment system. Successful mCommerce ecosystems, such as paybox in Austria, mpass in Germany, which inter-operate among all the Telcos in the country, collaborate on a mobile payment system and compete on offering services to customers.
The Role of Social Networking
As mobile commerce takes off, I think we’ll see social networking involved in some way to grease the wheels of the mCommerce ramp up. All the ecosystem players already have a presence there. Advertisers will move from just advertising to actually selling to consumers by leveraging context and location-based services to offer discounts and personalized services. Social networking could potentially become the arena where merchants sell their wares, banks offer a mechanism to pay, Telcos extend their operator billing, cloud wallets or NFC payments to integrate with social networking, and consumers—already connected via Facebook and other social networking sites—will benefit from the choice of mob
ile payment options.