Mobile World Congress has historically been a place for lots of mobile payments hype but little substance. But the market is maturing. Apple Pay’s 2014 launch kick-started the market, and followed by Samsung and Google in 2015, mobile payments are becoming mainstream. There is no one size fits all solution and MWC 2016 highlighted the diversity of approaches. Operators, device makers and over the top players are introducing a range of different services.
Recent news and announcements at MWC include:
- Mobile money interoperability in Tanzania: announced by Tigo, Airtel, and Vodacom ahead of MWC, operator backed mobile money services in the African country are now fully interoperable.
- PayPal revisits NFC: following the launch of NFC solutions by Apple, Google, and Samsung, PayPal plans to reintroduce NFC support for Android in the US and Australia in 2016. PayPal had previously phased out NFC support in 2013.
- PayPal extends operator reach: in addition to bringing back NFC support, the US-based payments company strengthened its position with mobile operators partnering with Vodafone and America Movil to support their wallet services.
- Samsung makes payments progress: the Korean device maker reported 5m registered users of its Samsung Pay service.
- Carrier billing companies sense new opportunities: carrier billing companies were again well represented at MWC. Buoyed by Apple introducing mobile payments for iTunes content in Russia and Germany in late 2015, carrier billing vendors are hoping for further growth in 2016. Challenges remain in big markets such as India – which could be a major driver of growth. Other opportunities could come in the form of support for non-digital payments in Europe.
- Orange banks on financial services in France: announced in January 2016, French mobile operator Orange fleshed out its plans to launch a mobile-only bank in its domestic market. The operator plans to use an acquisition of a majority stake in the Groupama bank to launch mobile-only services in 2017. It will target services to its 38m French customers and aims to use its strong physical retail presence to drive user acquisition.
- Ericsson brings industry together in Peru: the Swedish company highlighted its work with ASBANC the Peruvian National Bank Association to launch an interoperable mobile money service. The group aims to reach 2.1m mobile wallet users by 2019.
- Docomo makes payments a key focus of new Docomo Digital international brand: having made a number of acquisitions of European mobile content and services companies, Japanese operator Docomo launched its new Docomo Digital brand at MWC. Bringing together European subsidiaries Buongiorno and net-m, partnering with mobile operators for payment services will be a key focus for the new brand.
The range of different mobile money related news highlights the growing maturity of the market and how approaches must be tailored to different regions and audiences.
The examples of Ericsson and operators in Tanzania show that mobile money services in emerging markets are still focused on driving financial inclusion and developing the overall financial services industry. In these cases operators still have a strong opportunity to shape the development of mobile financial services. However the opportunities for differentiation between operators are becoming more limited. Interoperability helps drive overall mobile financial services inclusion, but means consumers will expect all operators to offer a mobile money service. Instead of user acquisition, operators must focus on the quality of the service to use mobile financial services to retain users. There are also revenue benefits from transactions, reduced costs for wallet based top-ups and new revenue opportunities from a wider portfolio of services (e.g. loans, insurance).
The opportunity for operators in mature markets is more limited. Partnering with companies like PayPal highlights the need for experienced digital payments partners to be able to offer a compelling service. For PayPal, faced with increased device and OS-based competition, partnering with operators will provide a useful marketing and distribution channel and could help get services preinstalled on devices.
PayPal’s NFC U-turn shows the impact that Apple Pay, and more recently Samsung and Google, have had on the market. There was little enthusiasm for NFC solutions when PayPal dropped support but consumer adoption has increased rapidly since Apple Pay launched in 2014. The threat PayPal faces from Apple Pay and Android Pay is not limited to in-store use cases; both services also enable in-app transactions which could damage PayPal’s core business.
Another way mobile operators can take a share of the payments business is through carrier billing. Support for Android application stores, largely Google Play, is becoming more common. There are still markets in which operators have yet to support Google Play carrier billing, most notably India – where there is a huge opportunity to grow the mobile content and services market. The launch of carrier billing for Apple’s iTunes content in late 2015 boosted enthusiasm for operator billing and many are now looking to provide support for non-digital transactions as a way to further grow the market.