Though the hype around mobile wallets is at an all-time high, a lot of work remains before phones can be considered a mature venue for financial transactions.
Banks still must attract actual users and settle the turf wars among the various companies and industries that stand to profit from mobile-payment systems.
Telecommunication companies, Google Inc., banks and card networks, many of which are at odds with one another over who owns the various rails and subsequent income, are all chasing the mobile-wallet market with tenuous collaboration at best.
"There are issues here, not only in terms of cooperation, but also in figuring out how the control points in the mobile-wallet ecosystem would actually work together," says Rick Ogelsby, a senior analyst at Aite Group.
"There is good momentum in the industry, but at the end of the day, the control points rely on the business partners," says Gerhard Romen, chair of the Mobey Forum's mobile-wallet task force. "That determines who pays or who charges whom and for how much."
The Mobey Forum, which includes banks, payment schemes and service companies, has finished work on a white paper that analyzes how the different stakeholders will affect the development of the mobile wallet (see story). The forum's participants include Bank of America, DNB Bank, Rabobank, Royal Bank of Scotland, SWIFT and other international companies.
The forum's research identifies several control points where the different stakeholders play a distinct role in development of the supporting infrastructure. The mobile-wallet ecosystem remains in its infancy with little collaboration, the forum says, and clarity over roles and strengths can inform a broader discussion about development.
"Ownership" of a control point does not create value for a stakeholder, Romen says. Ownership is simply part of what that stakeholder can contribute to a larger ecosystem that's of mutual benefit to the entire market. If the mobile wallet's network is limited because it can't work everywhere, consumers won't use it.
"One important thing here is that consumers will decide which wallet to adopt," Romen says. "The wallet has to work seamlessly and add value for consumers that's beyond what they would get with a credit card."
The forum identifies the stakeholders as banks, payment-scheme owners, device manufacturers, mobile-network operators, operating-system providers, merchants, regulators, users and other service providers. The actual control points include data ownership, data flow, connections to and from the wallet, distribution channels, customer acquisition, bearer-connection technology and other channels through which value can be derived form the mobile wallet.
The agreements over customer and transaction data likely will be the most difficult to work out. Banks would appear to be well-positioned here because they typically have the relationship with the consumer. But the transaction still relies on the handset, the telco and the merchant.
"The data flow and ownership are the most crucial points nowadays. It's the management of data, including transaction management and the interconnection between mobile payments networks," Romen says. "There's a lot of data that gets accumulated. The key part of the mobile wallet service [is] who can aggregate most of the data."
The forum did not endorse specific "owners" or suggest a cooperation model. And even once the structure of the market is agreed upon by stakeholders, working out the details of collaboration will still be elusive due to the diversity of firms and tech involved.
"A lot of the issue is the different business models. Not everyone uses SIM cards, for example," Ogelsby says. "So storing SIM card data makes sense for some but not for others. There are also issues around the data, [such as] how to access the data once it's on the phone and who actually owns the phone. Should that data only be open to the wallet, or should it be open to any application that resides on the phone?"
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