Money is an easy thing to want to be in business with — I mean actual money. The carriers, banks, credit card companies and startups like Square Inc. are aiming for what many are predicting to be the next big channel for financial transactions. The transfer of money between or via mobile devices isn’t exactly new, but the bleeding edge of technology has made mobile commerce somewhat of a new sensation (cue the INXS track).
How all these forms of mobile commerce shake out will depend largely on how much control the wireless operators have and are willing to give up in the name of partnership and innovation. Carrier control has faded in some respects. App stores and smartphone operating systems have circumnavigated the carriers to build new business models and revenue streams that don’t touch the carrier books. But in the end, everything flows through the network. The carriers control the network, and though they are battling to varying degrees to control what flows through their pipe, the network will always be their greatest position of strength.
Carriers are still locking down some of their devices and disabling functions that could compete with their services, but the shift to open APIs and platforms is slowly becoming the new course. For the carriers, money might make things different. Doesn’t money make everything different?
Three of the big four carriers have put their collective weight and resources into Isis. The m-commerce venture began with a limited number of players to presumably allow the carriers to maintain more control, but it has already shifted gears to open up its network to multiple financial institutions. “This was not in any way a retreat from their plan, but they saw that there was no reason to wait. They should open this up right away and get traction,” said Randy Vanderhoof, executive director of the Smart Card Alliance.
Sprint Nextel Corp., the only major carrier that opted out of the Isis venture, has put its chips in with Google Inc. Not surprising when you consider that more than 75% of Sprint’s device sales are powered by Android. That little factoid came out yesterday when Google and Sprint announced their partnership on the Google Wallet and Google Offers.
Financial institutions are positioning their own businesses for m-commerce and partnering on these new initiatives as well. It’s too soon to say what solution or business model will win out. “They’re all trying to protect the market share that they have,” Vanderhoof said. “The partners in this can’t do it individually on their own. They’ve all been eager to find a way to enter the market.”
Different from online, mobile presents a unique point of disruption.
“The mobile device lowers the barrier of entry because it’s a technology platform that enables reliable communication very inexpensively so that you can build new pipes that can operate very efficiently compared to the traditional networks that are in place for physical card products,” he said.
“It’s still early in the process to see just how much support is going to go into these new mobile payment solutions around NFC,” Vanderhoof continued. “The speed of adoption is going to be heavily influenced by the mobile operators in the United States because they ultimately control the handsets and devices that are in the market.”
