Shailendra Maurya, Head of Development at Cerillion, looks at what’s holding back mobile commerce in the western world and identifies Online Charging Systems as the catalyst for a new wave of opportunity.
Last weekend I took my sons to watch a movie. I had planned it well and booked the tickets in advance online. On reaching the cinema I felt somewhat smug seeing a long queue at the ticket window, and as I walked up to the pre-booked ticket collection machine had the sense of being amongst the ‘elite’ knowing that we would shortly be taking our seats in the cinema without the hassle of waiting in line.
My elitism, however, was short lived as I soon realised that I had left my wallet at home and I needed my credit card to be able to collect the pre-booked tickets! Fortunately, after a quick phone call to my wife and a nervous wait whilst she drove across town, my credit card arrived just in time for us to make it into the movie. But why did we have to go through all this in the era of mobile technology?
Contrast my experience in the UK with the m-commerce options available in the emerging markets: Abayomi receives a call from his wife asking him to pick-up some bread on the way home. As usual for Tanzania he is stuck on ‘daladalas
’ in traffic so is able to hop-off at the next corner at a ‘Ten to Ten’ shop. He picks up some bread and is able to make the payment by sending a simple text message. This is just one example of how mobile technology has greatly helped the 50% of unbanked adults in the world
, like Abayomi, to realise the benefits of electronic payments.
There are multiple ways of using mobile phones to make payments, including SMS and USSD messaging, mobile web, and the most recent innovations around NFC and mobile apps. Over the past decade there have been a number of high profile attempts to bring m-commerce to the masses including the GSMA’s ‘Pay-Buy-Mobile’ initiative which was launched back in 2007, but it seems that none of these has really captured the imagination of the retailers in the western world.
And why would they? With established payment relationships in place with the major card networks, the complication of introducing a fragmented set of mobile payment technologies has been a step too far for many. Some organisations are pushing for their own solutions, for example TFL in London with the Oyster card
system, and Barclaycard with its own stick-on NFC payment tags
. However, none of them offers the ease for the consumer of not needing another relationship with a payment/services supplier.
With mobile phones, the biggest advantage is having an existing billing relationship with the network operator, which means there should
be no need to complete any additional registration. So why not make more use of this relationship?
Accepting micropayments by credit card is inherently expensive for a retailer, as they must pay significant card processing fees for each transaction. So what if those micropayments could be consolidated on a mobile phone bill or in a mobile wallet, and then a single transaction processed for the retailer at the end of the month? Lower payment processing costs could be passed on to the customer in lower prices too.
This would shift the credit risk from the card companies to the mobile operator, but with the latest generation of Online Charging Systems (OCS)
they should be well placed to manage the payment authorisation process and minimise their exposure. This would not only bring immediate additional revenue, but when combined with other sophisticated Business Support Systems also provides the potential to enrich the customer relationship with more innovative billing promotions and loyalty schemes.
The EU is already stepping in
to cut the cost of credit and debit card processing, but this is likely to take many years to filter down as a benefit to the end consumer. The window of opportunity is therefore wide open for the mobile operators to finally take the initiative and offer an effective mobile payments solution that should benefit retailers and consumer alike. And as we’ve seen in the emerging markets, when the mobile operators can provide a solution that meets the needs of both, then it is much more likely succeed.