SMS has been the mainstay of the Mobile Payments industry for over 10 years. Near Field Communication (NFC/RFID) is the emerging technology supported by Visa, MasterCard and the Global Banking community. It allows users to make payments by waving their mobile phone in front of a compatible reader.
But with the arrival of the Smart Phone other technologies are emerging. For example, Intuit’s GoPayment is an app that turns the iPhone or iPod touch into a credit card terminal that can process payments, track past charges, and generate electronic receipts for the customer.
Then there are the micro-payments players like MobillCash, Zong, Spare Change and BOKU. These start-ups support SMS mobile payments for micro-transactions on social network applications and gaming sites. For example Boku Mobile Payments Users enter their cell phone number on the site, reply to a text message and then all virtual charges are automatically charged to the user’s monthly cell phone bill. While MobillCash users pay by just entering in their phone number and then typing in a 4 digit code they receive via SMS.
Now don’t be fooled into thinking these micro-payment start-ups are minor players. TechCrunch reports that Zong has already processed mobile payments for over 10 million unique users worldwide in 2009. The size of that customer base would make Zong one of the top four banks here in Australia.
4 billion mobile phone users and only 1.6 billion bank accounts
Prior to the MasterCard announcement the big play this year had come from Nokia. In August they announced they would be launching Nokia Money, a new payment service powered by Obopay that allows users to send money to friends, merchants, and service companies simply by using their phone numbers.
The company’s aim is to Build a new ecosystem for mobile payments.
One of the biggest markets for this type of technology is in the emerging markets like Asia, Africa and South America. Places where many people have phones with pre-paid SIM cards but don’t have bank accounts.
The stakes are high. Visa has almost 5 times, and MasterCard almost 3 times, the transaction revenues of the Global Mobile Phone industry. If you are going to play in just one MobCon sector over the next 15 years then clearly forget media, forget software and forget telecoms. This is the game you should be in and it’s a game you should be playing to win.