Ovum says operators must rethink role in mobile payments

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Report from analyst suggests operators will struggle to compete against bigger players like Google and should instead focus on B2B mobile payments  

A report from research firm Ovum has said operators must rethink their traditional role in the mobile payments value chain in order to remain relevant. It follows the launch of the O2 Wallet mobile money service.

‘Mapping Mobile Payments’ states that despite operator belief that mobile wallet services will keep them centre stage in the value chain, increasing competition and the threat of rival services from “powerful over-the-top (OTT) players” means this will not be the case for most.

The report says one of the most difficult challenges for operators will be from these players offering mobile wallet service free to customers and merchants, shifting the business model to mobile advertising where operators have a lack of experience.

Author report and principal analyst Eden Zoller said: “This is exactly what Google is aiming to do with its mobile wallet service and if it gains critical mass then it will have a disruptive impact on operators.”

The research indicates the majority of operators are exploring collaborative mobile payment ventures that can leverage collective resources and customers, helping to create the kind of scale that is critical for success.

However, Zoller said there is a risk operator mobile payment ventures won’t move quickly enough and will be hampered by lack of consensus and decision making.

He argued there are questions over how substantial revenues from large scale collaborative ventures can be when revenues have to be shared between an increasing number of parties.

The report also states that many operators would benefit by focusing more on B2B mobile payments rather than just competing against OTT and other players via their own brand D2C (Direct to Consumer) mobile wallet services.

Zoller adds: “One way of adding value is to act as a facilitator for card issuers that could see operators provisioning cards virtually or via stores, helping with authorization by distributing cards to verified users on their own networks, leveraging customer data from user accounts and credit checks.

“This will be invaluable to credit card issuers struggling to obtain reliable user data/ identification on potential owners of cards and the service described could save card issuers time and money.”

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