I am just returned from the 25th anniversary International CTIA Wireless conference Las Vegas. An estimated 40,000 people were expected to attend and from the look of things, that number seemed right.
It was encouraging seeing companies willing to travel for a conference and presenting new innovations in the mobile space. The conference is focused on carriers with new handsets, bandwidth solutions, and partner announcements. Wireless innovations in energy, healthcare, education, entertainment, retail and transportation all accentuated the need for speed and theme of 4G investment and broadband conservation/management. For those of us in payments, there was a whole day at the beginning of the conference dedicated to Money over Mobile (organized by Kate Kingberger, CTIA & Javelin’s Jim Van Dyke as MC) in addition to many payments vendor booths and educational sessions.
Over the four-day conference, it was apparent that a framework is needed to untangle the confused conversation when it comes to mobile payments. People were talking apples and oranges at times and a little clarity of language goes a long way. Glenbrook Partners has separated mobile payments into Payment Domains: Point of Sale (POS), eCommerce, Person-to-Person, Bill Payment and B2B. (For those of you interested in the future of mobile payments at the point of sale check out the upcoming Glenbrook Partners webinar Mobile at the POS in the U.S. – Scenario Analysis)
These are the major payments themes I observed at CTIA 2010:
Carrier Billing Payment Solutions
Carriers are taking further steps to use the customer bill to fund digital download ecommerce payments. Dollar thresholds for these payments limit the risk for the carrier. Generally, although the ticket is low, high margins can be achieved. Richard Borenstein from Zong (more from Payments Views on Zong here) spoke on monetizing gaming and tapping into carrier billing. Most gaming customers know their cell phone number but not their card number. Also representing carrier billing payment solutions, Ron Hirson from Boku (more from Payments Views on Boku here) spoke during Monday’s Money over Mobile sessions on applications. Verizon and Danal announced Monday their BilltoMobile payment service. Verizon Wireless customers will be able to pay for online content downloaded from Danal’s network of participating e-commerce merchants up to a monthly limit of $25. (See the article Will Verizon Move Bring Momentum to Mobile Transactions also on Payments News). Wireless carriers payment solutions have typically charged fees equal to 20 – 50% of the transaction value. The new Danal / Verizon BilltoMobile service charges a combined total fee of 15% and it is unclear if other carrier payment models will follow this pricing or defend their value in the market place.
Mobile Banking Is More Than Online Banking On The Phone
On Monday, I moderated a panel with Sarah Overcash from SunTrust Bank, Peter Ho from Wells Fargo, Tim Ruhe from FiServ and Rebecca Loevenguth from Western Union to discuss the banks’ perspective on mobile payments. The panelists identified the features of mobile banking that appealed to customers and discussed the convenience test of new mobile services. “Place the phone beside your computer and decide – which device would I use to perform this task.”
Bringing Western Union to the panel was an interesting choice but one intended to remind us that the target for mobile bank services extends beyond typical online banking customers. SunTrust who is targeting their offline as well as online customers with new mobile banking services echoed this point. See the article on the session “Wells Fargo, Western Union: Mobile financial services all about convenience” in Mobile Commerce Daily. Convenience leading to loyalty was another key sentiment echoed by Walmart’s Aaron Kribs in a subsequent panel. (Walmart exec at CTIA: Mobile commerce all about convenience, trust)
- SunTrust announced Fiserv as their new mobile platform provider
- Wells Fargo announced new Visa credit card alerts
Mobile Phone Card Acceptance – A Growth Opportunity
The ability to accept payments via a wireless device has been available from point of sale providers for a long time. What has changed is that developers are now enabling that capability on a device you already own (not lease) and allow you to accept payments anywhere. Intuit was at CTIA with its well-positioned GoPayment solution. Many expect mobile phone card acceptance to target small businesses and reduce their potential point of sale costs. Intuit’s access to small businesses and back office integration through QuickBooks makes it a strong player in this market. (Other players can be found in the Washington Post coverage that describes Verifone’s PAYware mobile for iPhone and mobile startup Square. TSYS has also launched MobilePASS for Blackberry in October 2009.)
Unattended Terminals Are Growing
In addition to the phone as a mobile card-accepting device, several other mobile point of sale devices were on display. New technologies taking advantage of Machine-to-Machine (M2M) communication provided a glimpse of the changes in unmanned terminals and cashless vending. (See the Teli/USA Technologies announcement here)
Point Of Sale – Sharing The Revenues
This is a big topic to summarize so quickly, but here goes. In the area of NFC and point of sale mobile payments there has been talk about consortium negotiations, and even government involvement, to share payment revenues between the banks, service providers and carriers. The discussion at CTIA this week demonstrated that it’s unlikely to be about splitting 1-2% in fees for card payments at the point of sale unless the carriers are willing to take on the credit risk. Attendees talked more about incremental value the carrier/phone provides in location-based services, coupons, loyalty and customer knowledge. These new services will deliver carrier revenue.
Alcatel-Lucent announced their Mobile Wallet Service targeting the mobile networks operators and providing them control of the both the payment applications and business rules in the wallet. The Alcatel-Lucent offering is a hosted service with a variety of potential payment applications including person-to-person, remote ticketing, loyalty or coupons, mobile ecommerce and proximity payment at the point of sale with NFC (with or without stickers). (See Business Week article here) Control of the business rules in the mobile wallet in the hands of the Mobile Network Operators – now we can talk about sharing revenue!
Attorney Dax Hansen from Perkins Coie moderated a panel on international perspectives for Money over Mobile. Dax was particularly interested at CTIA in the prospects of adding location based phone capabilities to the carrier side of potential point of sale payment services. See the article “Mobile LBS blowing up but monetization is a challenge”. We enjoyed a brief but lively chat on the topic of “revenue sharing versus value-added services” between banks and carriers that echoed a discussion at the Money 101 panel. See more on the panel discussion – “MasterCard, PayPal reveal conflicting views of mobile financial services” which also included perspectives from Clairmail, First Data and Qualcom’s Firethorn. The question is one of risk and value.