Wireless Carriers Seek Greater Role in the Mobile Payment Revolution

by Matt Klassen on December 4, 2013

Wireless carriers are looking to inject some renewed energy into NFC-based mobile payment services as we approach the New Year, if for no other reason than mobile payment has the potential to be another lucrative revenue stream for the increasingly beleaguered carriers.

To that end, combined US carrier venture ISIS—one of the original mobile payment platforms—finally went live last month with its digital wallet service, and we’re seeing similar projects finally hitting the market in Europe and in China, all in the hopes of securing consumer interest in SIM driven payment solutions–ones that give carriers more control—as opposed to independent web-based mobile payment options.

But carriers’ enthusiasm for NFC may backfire, for while consumers have yet to crown a champion of the mobile payment revolution many analysts believe carriers are already on the outside looking in, for while their SIM based NFC options may be more secure, they’re a whole lot less popular than the alternatives already.

Finding a role in the mobile payment revolution is crucial for carriers to remain relevant in the mobile process, but finding such a role is becoming increasingly difficult as more natural payment options—like Google or PayPal for instance—begin to offer their own mobile payment solutions.

As it stands, American carriers’ joint ISIS project is attempting to establish a mobile payment standard tightly integrated with a smartphone’s SIM card, a process that would give operator’s greater control and a more important role in the entire transaction chain than other web-based solutions would, making it obvious, then, why carriers are pushing so hard to implement their own solution.

But as I mentioned, carriers will have to compete with those web-based solutions, ones that are often more natural for consumers as they’ve been using those same payment services online for years now. Further, web-based solutions don’t require merchants to implement particular mobile payment hardware or require consumers to have certain devices to use the service, just the app.

Google, for one, has developed its own mobile payment platform that likely has carriers in fits, for it disconnects the mobile payment process from the phone’s SIM card, thus removing the only meaningful role carriers had in the process. As Caroline Gabriel of Wireless Watch explains, “The search giant gave NFC a boost in the latest Android release, KitKat, by making it easier for developers to include it in their apps. But it does this by moving personal credentials off the secure element in mobile devices, in other words the carrier-controlled SIM card or equivalent.”

Simply put, Google has developed a way to tie the NFC chip into apps directly, bypassing the phone’s secure SIM by utilizing the cloud for payment processing. While carriers are hoping question about the overall security of this method deter consumers from mass adoption, there are some who believe wireless providers will not play any important role in the mobile payment revolution. As Jordan McKee, an analyst at Yankee Group, told WirelessWeek even though carriers are trying “to find a place in the value chain…they’re really clutching at straws when they do. All the sudden the opportunity kind of evaporates and they’re relegated again to a dumb pipe.” Exactly the result carriers are hoping to avoid.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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