Europe Faces a “Tsunami” of Mobile Payment Options

July 23, 2012 3:00 pm

A rapid surge in mobile payment initiatives is putting pressure on banks and mobile phone operators to move into the mobile payments industry quickly, after Deutsche Telekom and MasterCard announced they have formed a Europe-wide mobile payments partnership.

‘If financial service providers delay taking an active interest in mobile business developments, other competitors could rapidly set the tone in the mobile industry,’ said Thomas F. Dapp, an Economist with Deutsche Bank.

‘There is a sense of urgency among banks, mobile operators and others wishing to launch mobile payment services ahead of competitors,’ said Ben Regnard-Weinrabe, of Hogan Lovells. ‘Mobile P2P services are gaining momentum.’

Remember when mobile phones and credit cards used to be different?

Spanish operator Telefonica has become the latest telecom player to roll out a mobile payments scheme. The company has announced a number of global direct-to-bill deals with Facebook, Google, Microsoft and Research in Motion, enabling millions of users to pay for content through their mobile phone bills.

Only days before, Google said it has started working with an undisclosed number of  banking partners to streamline and improve its mobile wallet service, while on the same day UK bank NatWest launched TouchPay, a four-month trial for users of the iPhone 4S or iPhone 4 who can pay for purchases of £20 or less on British high streets from their current accounts through their iPhone.

Jonathan Bye, Senior Consultant at the Royal Bank of Scotland in London, calls the latest developments ‘more than a trend, it is a tsunami!’ Bye stresses that ‘for the first time in history retail banks are actually acting like retailers. What is interesting is the huge variety of mobile payment initiatives.’

Dapp is expecting ‘cut-throat competition between banks’ and predicts ‘new opportunities for strategic alliances with the already established providers. The big internet platforms are focusing their efforts on the mobile market and successfully tapping into the preference of the internet-savvy generations to implement business models.’

Bye expects that ‘the range of options on offer is going to bewilder consumers and business users’ and stresses that ‘it is vital to have a simple and clear customer proposition.’ Bye thinks that we must ensure common standards and interoperability to guarantee success. ‘Competition is vital but so is collaboration.’

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