Even though Brazilian telecom operators and financial institutions have not reached agreement about who should be responsible for each part of the mobile payment process, IT providers are working toward launching m-payment solutions.
Vendors are looking forward, developing solutions to be prepared for when demand arrives. Examples include German software giant SAP, whose Sybase 365 Mobile Services platform provides an architecture for m-banking, m-payment and m-commerce, and the HP and Nokia Siemens Networks (NSN) partnership, announced during this week’s Ciab—a conference and exposition focused on IT for financial institutions held in São Paulo.
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There is no single explanation why m-payment has not taken off yet, but several factors indicate that until now there were no user-friendly applications or easily managed tools available. Security is another issue that stalls adoption, and it is critical that customers see the added value of this solution. For example, they might ask: why should they use m-payment if they have a credit card?
SAP, HP and NSN believe customers will switch from credit cards to mobile payment. Indeed, Pyramid Research has estimated that mobile commerce and mobile payment transactions will top hundreds of billions in coming years.
Informa Telecoms & Media pointed out that the gross value of global m-commerce transactions are estimated to grow from U.S.$106 billion in 2010 to more than U.S.$1,609 billion in 2016. And Juniper Research is predicting NFC payment transactions will reach nearly U.S.$50 billion globally by 2014.
Great numbers boost vendor ambitions to capitalize quickly on the fact that users are relying on their mobile devices to enhance their shopping experience. “To new generations mobile is the natural technology—and not an innovation. By 2015, we have a clear perspective that mobile banking will accelerate across emerging markets,” said CPM Braxis Capgemini’s Paulo Lessa Moreira during his lecture at the Ciab event.
The increasing cellphone base (there were 254.95 million active mobile lines in Brazil in May, according to Anatel) is a turning point for the improvement of mobile financial applications. SAP’s vice president for banking in the Latin American region, Tonatiuh Barradas, noted that mobile technology will also help banks attract customers who do not have bank accounts. “It will give low-income people access to the financial system. Many low income people are much more familiar with cellphones than other sources, so it might be easier to attract them using a mobile platform,” Barradas told RCR Wireless.
Barradas said SAP has case studies in South Africa and some Asian countries. There are some prospects in Latin America as well. “In each Latam country I recently visited, there were three or four banks interested in our architecture,” he said.
HP and NSN are also optimists. Joaquim Silveira, sales diretor at HP Enterprise Services, said there is one player interested in acquiring their solution.
Business model
While in emerging countries, mobile banking and payment can include more people in the financial system, in developed nations, these platforms are focused on providing more valued services to current customers.
Under Brazilian laws, telecom companies cannot process financial transactions, and carriers and banks have not teamed up yet, which has been the biggest barrier for mobile payment development.
“I believe that collaboration will prevail. I do not think this business will be led by anyone, but I trust there will be a group of companies, and once they are partnered, they will drive the market,” said Barradas.
HP’s Silveira also noted that telecoms and banks will have to agree to make m-payment happen. “In addition to the huge amount of mobile active lines, the rise of the C-class has increased the potential market even more,” he said.
Gladson Russo, manager at NSN Latin America, said that there are new entrants in this market, such as Google, and if traditional players do not move quickly, they may lose market share. Russo believes the convergence toward a secure mobile wallet with different kind of personal data is the best solution.
The HP/NSN partnership is focused on the Brazilian market. They are going to the market together with HP focusing its strategy on banks and NSN eyeing telecom operators. “We are suggesting a solution to this market,” said Silveira.
