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Thursday, October 28, 2010

Sprint's mobile wallet sounds sensible

I'm not generally a big believer in mobile payment solutions for developed-world countries.

Cash, cards and online payments already work perfectly well for me and other people, thanks. I don't need to "store value" in my phone, I don't want to scan it across an NFC reader, and I certainly don't want my operator bumping up inflation by taking a slice of everything I spend.

I especially don't buy the "bill it to my phone bill" concept of mobile payments - like many people, I have a very different relationship with my bank & my telco(s) and I'm quite happy to keep it that way. You'd have to be crazy to have a financial-services arrangement with an operator which tied it to an access account provision, although if it was access-independent it might make a more sensible proposition. There's also no way I'd exclusively use my phone for payment when travelling, unless all the transaction data was very explicitly zero-rated for roaming, and I had a guarantee of 100% coverage.

I'm also very happy with my existing payment mechanisms - Visa, Paypal, Mastercard, Amex and so forth. I might set up another, but I'd need a lot of persuasion.

But, Sprint's announcement of its mobile wallet solution is much more appealing - you get to keep all your existing accounts, but get access to them through your phone. Makes sense. Adds to what people already have, doesn't try to substitute it. Doesn't stop you carrying a physical wallet around as well as a virtual one if you choose. Doesn't try to bill things to your phone account. Maybe over time, if it's got a good UI and proves itself, you might change your approach to physical payments, some or all of the time. That's fair enough.

In other words, it doesn't force a behavioural change, but works with what people are already happy with. Which is good.

Now it's not 100% clear to me what the business model is, but in terms of "will this fly", my gut feel is that it has 100x the chances of all the various NFC and other mobile payments nonsense that's been trotted out in recent years.

Bottom line is that unlike most people in the industry, Sprint has actually bothered to look up the dictionary definition of a wallet: something that contains various different payment mechanisms from third parties.

Edit - looks like AT&T is also entering the fray. But they are going to go for the bill-to-the-phone approach. Let's see if people are actually prepared to wear that. My money's on "no" - although I'd rather not use an MNO-powered betting application & account....


Fred said...

Why don't you like SMS or premium number payment? They are very convenient when you don't have any change or local currency.

The "it's too expensive" argument does not fly since that's merely a question about what the agreed upon revenue is and can be changed at will.

Furthermore, a 50-70% cut for the service provider is always better than 100% of nothing. For validation, just look at Apple's App Store.

Fred said...

I obviously meant "revenue share", not "revenue" in the previous comment.

Fred said...

Let me give you a real life example of a very much needed SMS/premium number payment service, to bring it much more closer to home.

Two words: public transportation.

Just imagine how much better life would be if you could buy tickets to the Tube in London directly on any cell phone, as you can do in other countries.

A lot off the hassle when visiting London would just melt away. No more frustrating queueing for a silly Oyster card I'm only going to use once. Just get out your phone and go. I'd even be willing to pay a small premium for the pleasure, if necessary.

Please note that in the Scandinavian countries, there isn't even an extra charge for mobile payment of public transit tickets. In fact it's cheaper than buying with cash.

Dean Bubley said...

No, I absolutely disagree.

SMS payment is OK for a few things - mostly digital goods like ringtones. But buy a real-world product like a sandwich or a beer or a magazine? Why? Most of them take debit cards anyway.

Transport?! There's absolutely no way I (or, I think most other Londoners) would want to pay for the tube and buses by phone. Tourists / visitors - maybe different, by I don't think so.

In terms of regular local people - firstly >50% of public transprt users use prepay, and therefore are often likely to be out or low on credit. Yes, it's theoretically possible to have two prepay "buckets", one for mobile services and one for Oyster, but that just complicates things even more.

And for postpaid users? Loads of complexities - fraud, people with business devices, lousy coverage, short battery life? No way. I want a separate card, with a separate balance, and the knowledge I don't have a rapacious operator sitting in the middle of the value chain.

As for visitors - well, I didn't find buying an Oyster-equivalent in Tbilisi a couple of weeks ago especially onerous. Certainly better than chancing the roaming costs on my phone, especially as I had data roaming switched off anyway. Via SMS? Maybe, but again only without a 40p a time cost premuium.

Read this about my own experience with parking via phone/SMS a couple of years ago - http://disruptivewireless.blogspot.com/2007/12/mobile-payments-for-car-parking-awful.html

Nadeem said...

A similar initiative was launched by a group of Indian banks last week. However, this does not involve the operators directly as the end user registers for this via the bank.

Dean Bubley said...

Hi Nadeem

Thanks for this.

The philosophy is the same, yes - ie use an existing payment mechanism. However, the Sprint one is actually a software wrapper (and API) for developers that mimics online payments more.


Anonymous said...

Hi Dean,

What do you make of the 'relatively' successful NTT DoCoMo mobile wallet Osaifu Keitai?

Dean Bubley said...

Anonymous - I think that the DoCoMo solution, is like many things in Japanese mobile comms, an exception rather than an example.

From memory of the analysis I've seen from Telco 2.0 on this, DoCoMo has gone to quite extraordinary lengths to get traction for it, in addition to its normal ironclad control over handset architecture. It made acquisitions in the merchant acquirer and card issuer space, and even took a stake in a convenience-store retailer (Lawson) to help seed the market with NFC readers.

Not something easily or willingly replicable by many other telcos.

Anonymous said...

Agreed - and even then less than 20% of subscribers with a capable handset actually use the service.

With regard to adding bills to the mobile phone - there is talk of Apple and Google interested in the likes of Boku and Payfone, which enable payment of digital goods just by providing your phone number and replying to a confirmation SMS. Good for developing, unbanked world as well as the 'youth' market who spend a lot of money on virtual goods on social networks...