The mobile payment space garnered a pair of allies today as German telecom giant Deutsche Telekom announced a deal with MasterCard to provide DT’s customers in Europe access to mobile payment services. The offering will rely on technology embedded onto a device’s SIM card, with authorization through a text message.
DT said it will issue the MasterCard products through its ClickandBuy subsidiary.
The initial rollout of services is scheduled for DT’s Polish operations later this year. The carrier’s German operations are also set for a trial using mobile phone tags and cards later this year, expanding to include mobile wallet services next year.
The mobile payment space has been incubating for years as carriers, financial institutions and device makers have attempted to exert their influence over what is expected to be a multi-billion dollar industry.
MasterCard earlier this year launched a partnership in Argentina with Telefónica as part of a broader agreement to expand mobile payment services across Latin America.
While commending DT on seeding the market for mobile payment services and the required infrastructure, Ovum noted the offering will face significant challenges.
“DT’s strategy is very broad and may be challenging to execute well in so many different areas and across the different geographies that DT operates in,” noted Ovum analysts Angel Dobardziev and Eden Zoller, in a report. “DT is also facing increased competition from a growing number of players with similar mobile payment propositions, including Google that, like DT, aims to differentiate with an integrated online and mobile payments service. We also see challenges with DT’s business model, which is based on a share of transactions and rental fees – we expect this to be tested by alternative models based on advertising with free services to consumers and merchants.”
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