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Banking on payments?

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The race to get the hegemony in mobile payments is on. June – hard to believe that its just around the corner, given the weather – sees a raft of small, focused events from various vendors and interest groups offering to lift the lid on the secrets of mobile payments: each one, naturally, championing their own preferred method.

But research reveals that the market for mobile payments is so fragmented that no one technology garners more than 5% of public use. Despite the fact that already 60% of consumers are using some form or other of mobile payments or money transfer technology on their mobile.

Interestingly, the research has been carried out by banking payment service provider VocaLink and concludes that the most trusted brands to deliver mobile payments are… banks!

Quelle surprise. Or is it? While I do feel a natural cynicism to research of this sort, I am starting to believe that banks are going to be the brands that could well make mobile payments a mass market tool used by everyone.

Mobile operators, naturally, assume that they will run the payment services on mobile – that’s how they roll. But in reality they have never managed to own any sort of consumer facing aspect of the mobile commerce ecosystem. They totally failed in music and games, they have failed in content and services and, despite valiant efforts with portals, failed to in that too. They are just the networks to make it happen.

There is some argument that retailers are trusted enough brands to make payments tools that consumers trust, but again this is bedeviled with problems. Retailers for starters are not money handling companies really – that is not their core skill. Also, a world where each retailer has its own mobile payment tool or app is never going to fly: it would be even more fragmented than it is now.

So that leaves the banks. They handle money. They are trusted to handle consumer money. They have the technology to handle vast numbers of transactions and they can work across every retail brand. The model is in fact already there with debit cards.

The only thing that none of this addresses is that it doesn’t really look at why people would move from the already ultra-convenience of cards and cash to mobile. But that’s another story…

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