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Multiple mobile payments models evolving, making an impact: panel

March 23, 2011

A consumer makes a contactless payment with an iPhone at the San Francisco Giants' AT&T Park

ORLANDO, FL – A CTIA panel that included executives from JPMorgan Chase and Visa Inc. outlined various evolving mobile payments mechanisms that are having an impact, from SMS and applications to carrier billing and near field communication.
The panel was moderated by J.P. Finnell, managing partner of Mobility Partners, Media, PA. It included representatives of various ecosystem players—a bank (Chase), a payment franchise (Visa), a telecommunications service provider/aggregator (Syniverse Technologies Inc.) and a third-party mobile payment provider specializing in carrier billing (Zong).

“Mobile payments is evolving, with a combination of factors coming together to change the landscape,” said Anil Jacob, marketing director of Chase Card Services at JPMorgan Chase, New York. “As consumers start to get more familiar with the more advanced services on their phone, they will start to expect and demand to pay using their devices.

“Being able to use it in ubiquitous ways and wide acceptance are key,” he said. “From Chase’s perspective, we believe that consumers in the U.S. and the rest of the world have ramped up their adoption of mobile technology and mobile ways of doing business, and that will continue to change at a very rapid pace every year.

“We really believe that mobile technology and mobile payments are a platform for us to continue to innovate and bring products and value-added services that we layer on top of it such as rewards or loyalty.”

Mr. Jacob said that the key question for Chase is how can it deliver benefits to consumers by providing a seamless experience that works at scale?

One of the most positive aspects that the mobile channel brings to bear is its ability to combat fraud, per Chase.

“When we send out a text message asking if a consumer made a flagged payment, most respond immediately, and that is a great user experience,” Mr. Jacob said.

“Remember that the customer service experience is absolutely critical for any mobile payments platform to work at scale,” he said.

Payments giant
Visa claims to have 1.8 billion accounts and 15,000-plus financial institutions that are part of its payments network.

The mobile commerce and payments market speaks for itself at this point, per Visa.

“There is still the expectation of a Big Bang effect for mobile payments, but there is much more of an evolution,” said Dave Wentker, head of mobile product development at Visa Inc., San Francisco. “These things are actually changing and happening now.

“Our role is to help financial institutions build and maintain relationships in the ecommerce and mobile worlds,” he said. “We are moving into the mobile channel more effectively with the banks, carriers and new players coming in.

“We have a long history of building those interconnects, so we are excited about the possibilities.”

Visa looked at potential integration of mobile for POS payments early on, but at that time even the best mobile phones on the market were not sophisticated enough for it to make sense at scale. With the rise of smartphones, that has changed.

“In retrospect it seems obvious, but at the time we looked at mobile phones and NFC, there were very limited choices for phones,” Mr. Wentker said. “We thought it would have some effect—well, it has had a massive effect already, as more devices come into the market that have these capabilities.

“We’ve also looked at an accessories strategy with a Micro SD to put NFC capability into an existing phone, so consumers don’t have to lose the phone that they love,” he said. “If there is any speculation out there about standards, it is really about industries coming together that haven’t traditionally worked together.

“You can try to go it alone, but you’ll have scale issues—if you want to go to the POS, you need partnerships, and that’s what we specialize in.”

Business models are changing, as there are more people doing electronic purchasing over the Internet, and a youth market that is not carrying credit cards and may not have a bank account.

The payment model is following the larger business model of more people purchasing electronically, whether mobile or not, according to Syniverse Technologies Inc.

“We’re seeing adoption of new payment models where there wasn’t a payment alternative,” said Michael O’Brien, senior vice president of business development at Syniverse Technologies, Tampa, FL. “You just have to have a device that supports SMS, which is pretty much ubiquitous.

“Consumers are saying I want additional choice, and there are multiple mobile payment options giving consumers choice in how to pay and merchants choice in what they accept,” he said. “The most interested use cases are mobile as a replacement for cash—train tickets, vending machines, parking, convenience-based transactions.

“Isis has an opportunity to put a mobile wallet together and offer mobile choices—however, if it is a me-too credit card, it is not as compelling—it has to be something that takes full advantage of the uniqueness of the mobile channel.”

Zong is focused on carrier-billing, often for virtual goods. It is in the process of expanding the scope of the transactions that its platform enables.

In 2011, the company is seeing the decline of carriers’ cut in the revenue-sharing model of payments that appear on consumers’ phone bill.

“Initially it was virtual goods primarily, but now we are moving much more to a mobile payments model,” said Nick MacIlveen, vice president of carrier partnerships and industry relations at Zong Inc., San Francisco. “Carriers are realizing they want a chunk of this mobile payments business out there today, and they want it to be competitive with PayPal, Visa, MasterCard, etcetera, so they are bringing their transaction fees down.

“There are 3.5 billion mobile phones out there, way more than the number of credit cards, and consumers are starting to really accept the mobile device as a payment mechanism,” he said. “The other side is carriers embracing it—they are saying ‘We want a piece of the action.’

“That will become very much a part of their growing revenue in the near future.”

Final Take
Chase’s Mr. Jacob

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Dan Butcher is associate editor on Mobile Commerce Daily and Mobile Marketer. Reach him at

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