6:45 AM Wireless operators have partnered up on mobile payments, but it may only be a stopgap until they're ready to tackle the market on their own

Sarah Thomas, Director, Women in Comms

May 21, 2012

3 Min Read
Mobile Money: What's the End Game?

6:45 AM -- DUBLIN -- Management World -- After the CTIA Wireless show earlier this month, I was left thinking that the over-the-top players are leaving wireless operators behind when it comes to mobile payments. But now, on the eve of Management World, I'm not so sure. (See Mobile Commerce Sidesteps the Carriers .)

Rather than ceding the market to third parties, could the wireless operators be devising a way to break free of their partnerships and take over the market by going direct to consumers on their own?

Take the U.S. wireless operators joint venture, Isis , for example. It was my impression it was formed so AT&T Inc. (NYSE: T), Verizon Wireless and T-Mobile US Inc. could offer Near-Field Communications (NFC)-enabled mobile payments paid for via direct carrier billing. The JV disputed this when it opened up its walled partnership to a number of credit cards, admitting then that it can't go it alone without established payment companies.

It's undeniable, however, that the better business model is one where carriers aren't splitting their profits five or more ways. That's also the model Amdocs Ltd. (NYSE: DOX) will be pitching here at the show. The Service Provider Information Technology (SPIT) vendor recently introduced a cloud-based mobile payments platform that would let them do just this. So far, it hasn't said which operators it's working with.

Heavy Reading analyst Sarah Wallace points out that the wireless operators have the advantage of an existing billing relationship with loyal customers, but they are also challenged by not being a traditional payments processors. What's more, the bill shock that would ensue when a customer sees their monthly wireless bill plus all the mobile payments they made that month could be significant. Even so, Wallace believes many operators are still interested in owning the whole payment process. Partnerships could just be an interim step. (See Isis Signs Up 50+ Merchants.)

"The big emphasis for the carriers is 'you've been a customer, we have that trust and we'll offer the capability and security,'" Wallace says.

The two schools of thought -- going it alone and partnering -- don't have to be mutually exclusive, but doing both would put the operators in the position of competing with their partners, an awkward situation they often find themselves in. (See T-Mobile Squares Off on Mobile Payments.)

I think partnering is the only way the wireless operators will play a role in mobile payments. The credit card brands have the cachet when it comes to payments; they're moving faster in the market; and working together is the only hope of easing fragmentation. But it will be interesting to see which ones agree with me and which ones are just biding their time until they're ready to take on the market on their own. (See Learning to Play Nice With NFC.)

— Sarah Reedy, Senior Reporter, Light Reading Mobile

About the Author(s)

Sarah Thomas

Director, Women in Comms

Sarah Thomas's love affair with communications began in 2003 when she bought her first cellphone, a pink RAZR, which she duly "bedazzled" with the help of superglue and her dad.

She joined the editorial staff at Light Reading in 2010 and has been covering mobile technologies ever since. Sarah got her start covering telecom in 2007 at Telephony, later Connected Planet, may it rest in peace. Her non-telecom work experience includes a brief foray into public relations at Fleishman-Hillard (her cussin' upset the clients) and a hodge-podge of internships, including spells at Ingram's (Kansas City's business magazine), American Spa magazine (where she was Chief Hot-Tub Correspondent), and the tweens' quiz bible, QuizFest, in NYC.

As Editorial Operations Director, a role she took on in January 2015, Sarah is responsible for the day-to-day management of the non-news content elements on Light Reading.

Sarah received her Bachelor's in Journalism from the University of Missouri-Columbia. She lives in Chicago with her 3DTV, her iPad and a drawer full of smartphone cords.

Away from the world of telecom journalism, Sarah likes to dabble in monster truck racing, becoming part of Team Bigfoot in 2009.

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