MADRID, Spain-As many European mobile-phone markets inch closer to saturation levels and as voice calls become more commoditized, European mobile providers are seeking other products and services to boost sagging bottom lines. One of the great hopes is mobile payment-the ability to use a mobile phone to pay for anything from a can of soda to insurance.
“If someone thinks they’re going to get their revenues from voice, they’d be wrong,” said Nigel Hawkins, a telecommunications analyst at Williams de Broe in London. “They are going to have to seek out other revenues in order to pay for the 3G licenses.”
In May, most of the leading banks and all the mobile operators in Spain announced a plan to invest some 7 billion pesetas (US$35.9 million) into a standardized system of m-payments. While other European countries have m-payment schemes in place-some by banks, some by operators and some by start-ups-the Spanish agreement is the most inclusive.
While those who study the mobile-phone industry agree that m-payment will become an important source of revenue, there are varying views on when and how. While operators are jumping into m-payment schemes across the continent, two of the leading technological research firms, Forrester and IDC, have differing views on the speed at which m-payment will grow.
Forrester, for example, takes a cautious approach. In a recent report titled “Mobile Payment’s Slow Start,” the firm predicts that m-payment will account for only 0.5 percent of consumer spending by 2005.
“That the mobile phone will become your wallet works well in a lab setting,” said Michelle de Lussanet, an Amsterdam, the Netherlands-based analyst with the firm. “But the kinds of initiatives necessary to make this happen on a broader scale do not happen overnight; for one, there are no standards.”
De Lussanet said the Spanish model recently unveiled offers some promise in that banks and mobile operators have agreed to work together on one standard, but added that alone does not guarantee success. She cited technological hurdles that need to be overcome to increase the speed and ease of m-payment. Perhaps most importantly, she said there will be a need to change behavior and increase the perception of security.
“Only 8 percent of mobile-phone users said that they were comfortable using the mobile to pay,” she said. “Consumers don’t change their habits so fast.”
IDC, while sharing some of Forrester’s concern about standards, the need for banks and operators to work together, and changing consumer habits, is more optimistic and calls for banks and operators to jump into m-payment now.
“There will be some 270 million mobile-phone subscribers in Europe by the year 2003,” said Chris Barnard, research manager of IDC’s European eBusiness and Networking group in Amsterdam. “That is one of the significant drivers.”
Barnard also cited upward trends in e-commerce throughout Europe and claimed m-commerce is not a far jump from that.
“People are used to getting their mobile-phone bills with a breakdown between data and voice, so I think people will be open to m-payment billing,” he said. “Mobile devices are very much a part of who you are, and banking readily translates to mobile devices, especially minor payments.”
M-payment will become part of the mobile landscape, but as with any new technology, the benefits to consumers, banks and operators will take time to become clear.
“It will be evolutionary rather than revolutionary,” said Hawkins.