- Mobile payments have failed thus far to reach their full potential as a transaction option for consumers – principally due to fragmentation in payment options and a lack of strong trusted service managers (TSMs) to broker services delivery between all parties.
- Mobile penetration in Asia has continued to grow dramatically, and recent intra-region payment initiatives, specifically via China Mobile, Korea Telecom and NTT DoCoMo, should accelerate adoption of mobile payments and create a MPOS market of approximately $500 billion (USD) by 2017 across Asia-Pacific.
Along with its cousin, NFC, mobile payment solutions have been the long-promised answer to an issue without a question. The technology has been available for quite some time and those of us that are of a more mature (ahem, read old) generation fondly recollect the early mobile payment solutions of the late 1990s. Adoption, however, has been slow, and for many consumers, there is uncertainty as to why mobile payment solutions are necessary.
This has not stopped mobile service providers from doggedly forging ahead with their (sometimes disparate) solutions and the potential market is massive; the GSMA estimates that Asia currently has 1.5 billion individual mobile subscribers (of which just under half are with China Mobile). However, a number of issues continue to dog adoption, namely the fragmentation of payment options, a lack of common standards and general concerns around both security and the role of a TSM.
I’d suggest that we are on the cusp of change and adoption is going to increase rapidly across the region – at least in certain areas. Outside of individual country deployments around the region, Korea Telecom, SingTel and China Mobile have all recently launched initiatives that address many of the above concerns, making an increasing number of businesses take notice. The most significant are the plans from Korea Telecom, NTT DoCoMo and China Mobile to collaborate on an interoperable zone across Asia as well as a prepaid Japan/Korean e-money mobile scheme in October 2013. China Mobile, the largest of all Asian mobile service providers, has extended an agreement with China Union Pay that incorporates eight of the 17 major commercial banks (with the remaining nine to come join over the next 12 months, from June 2013) and already reaches 1.3 million non-contact POS terminals within the country.
Some back of the napkin modelling around EFTPOS/EMV card payments suggests that the MPOS market in Asia will reach approximately $500 billion by 2017. As more TSM relationships form (such as the 2012 Singapore example), mobile service providers need to be looking to three areas to assure success and a slice of the $500 billion pie:
— Development of harmonized m-payments for both on and offline scenarios;
— Deeper integration of more TSM platforms and payment apps; and
— Creation of a wider, open ecosystem that encompasses merchants, software players, terminal providers and financial institutions.