NEW YORK-The battle over customer ownership in the emerging mobile-commerce market will evolve, by necessity, into a model of “coopetition,” said Philip Yen, executive vice president of e-Visa International.
Banks, credit-card companies, middleware providers, telecommunications operators and equipment manufacturers must and will join forces, each lending and profiting from their respective strengths, he said at the L.M. Ericsson Mobile Financial Services Seminar here last week.
E-Visa International, established in July, is at work on its “SkyGo” pilot project in Boulder, Colo. This is a test of consumer reaction to advertisements and promotions delivered via mobile phone.
“We believe this will have a high impact on incremental spending, and that is good for banks,” Yen said.
However, consumer “micro payments,” typically considered the sum total of mobile commerce, represent just a small portion of the transaction processing opportunity the credit-card company sees in the wireless arena.
Among other things, Visa International believes it can help network operators dramatically reduce the processing costs for prepaid services. These can amount to as much as 20 percent to 30 percent of a prepaid card’s face value, he said.
“There also is a lot of fraud, and we are working with operators to correct that,” Yen added.
Citigroup Inc. is testing mobile commerce in a friendly user trial involving Citibank Japan and NTT DoCoMo, said Alan Young, technology director for e-Citi. At the same time, Citibank Japan, DDI and Fujitsu “are partnering to build a live pilot of a mobile consumer payment system … where you punch a series of numbers directly related to the product of a particular merchant,” he said.
Closer to home and to its core business of financial services, Citigroup has a friendly user trial under way involving its own employees in the United States. The goal is to allow customers to use the same identification number and password to access their financial information on mobile phones, personal digital assistants, pagers and television set-top boxes.
This test involves AT&T Wireless Services, Verizon Wireless, Sprint PCS and cable TV operators, with 724 Solutions serving as middleware provider between the bank and the carriers. However, Young said Citigroup has established a system that would allow multiple middleware providers to participate over the longer term.
The bank is experimenting with various kinds of personalized information alerts designed to enhance customer loyalty.
“It’s absolutely amazing the value you can add with the simplest of services,” Young said.
By way of example, he cited Citigroup’s experience in Poland, where comparatively few people have personal computers but most have GSM phones.
The bank found its customer service centers inundated with balance request calls after payday in the middle and end of each month. Now, it sends an automatic short message service notice of the amount in each account to its customers’ cellular phones at those times.
Although telecommunications networks are inherently far more reliable than those of Internet service providers, Citigroup’s biggest concern is getting customer complaints for dropped calls and other kinds of connection interruptions outside its control, Young said. This issue is of particular concern when a customer is involved in a financial transaction, like moving money between accounts or buying or selling securities.
Internet Protocol networks, like CDPD|networks, do not have this inherent weakness because they are always on, said Gerry Zagorski, director of business development for AT&T Wireless. Neither do paging networks, said Ian Hobbs, vice president of product management for 724 Solutions.
To overcome this drawback in circuit-switched wireless networks, 724 Solutions maintains both the position of the user and the transaction sequence in its server, which is connected to the bank’s back-end infrastructure. The bank then has the option of setting timers that allow the user to reconnect where he or she left off or to start from scratch, Hobbs said.
The early adopters of wireless securities trading have been brokerage professionals, but Charles Schwab & Co. Inc. is gearing up for a mass consumer market across networks, devices and countries, said Jonathan Craig, vice president of marketing and business development.
“We look to differentiate ourselves on ease of use and navigation, which is critical, and also on depth of content, real-time quotes and integration with other channels. A customer wants to be treated as one customer across all channels, and we believe this will accelerate deployment of the mobile Internet,” he said.
Schwab’s PocketBroker service debuted first in Canada last year and began commercial service in the United States in June. More recently “we launched PocketBroker in Hong Kong with Ericsson, using WAP, WML (Wireless Markup Language) and PKI (public key infrastructure),” Craig said.
Ericsson is working with NTT DoCoMo to merge the features of that carrier’s proprietary i-mode standard and the WAP standard, which is open, said Haijo Pietersma, executive vice president of Ericsson’s Division of Internet Applications and Solutions.
The advent of packet-switched, always-on wireless networks will enhance WAP’s capabilities. Some iteration of WAP will always be necessary to take care of required functions, like formatting information to screens, said Jacob Goldman, Ericsson’s director of business development for financial services.
