Can anyone match Google in the mobile payments market? - Mobile World Live

Can anyone match Google in the mobile payments market?

07 OCT 2011

By Graham Friend

Mobile payments and the perceived opportunity to make money from them was one of the factors that drove the share prices of telecoms companies to dizzy heights during the Dot Com boom. More than ten years later though and we have still seen no real progress outside of a few mobile banking applications for developing markets and low value payment via premium rate SMS in the US. M-payments have not become the widespread phenomenon that they were expected to be.

A major contributory factor to the lack of success is the absence of global or even national coordination for an m-payment standard. Not that we haven’t seen attempts: A number of players in the last ten years have sought to establish standards but none have been successful and their efforts could be described as somewhat half-hearted. Mobile operators have perhaps felt that global coordination is best left to an overarching organisation such as the GSMA and have not wanted to participate in a potentially risky standards war.

However, with the progress made of late in NFC and the possibilities for increasing the value of mobile transactions that this brings, the stakes have been raised. As the recent launch of the Google Wallet service demonstrates, powerful over-the-top players are positioning themselves alongside a range of strong telecoms, media, tech and financial services players to fight a war to establish a mobile payments standard. Aside from Google, potential contenders include Apple, Paypal and Facebook. They will be competing against national and international consortia of mobile operators such as Isis in the US,  all of whom will be forming alliances with the giants of the financial services industry such as American Express, Visa and MasterCard.

According to Coleago Consulting’s analysis of the seven key assets that are fundamental to success in a standards war (control over an installed and loyal customer base of users, IPR and the ability to enforce it, innovation, a first mover advantage, manufacturing abilities, strength in complementary products or services and brand name & reputation), Google is currently best positioned to establish a leading standard.  It is dominant or close to being dominant in almost all criteria with the exception of brand & reputation and has partnered with all the key financial institutions that score most highly in terms of trust. On their own financial services firms are weak, hence their willingness to partner. Paypal would be the second choice of partner for operators after financial services firms but in the absence of such a partnership its position looks fragile.  Apple has some good assets in place but as yet its strategy for mobile payments is not clear, although it should never be discounted.

A mobile operator alliance in partnership with financial institutions is therefore the combination that is best positioned to challenge Google. However, the challenges of global coordination may prove an impediment to the nimbleness that operators will need to overtake Google. Pre-emption will be an important tactic in the battle. More often than not a standards war results in a “winner takes all” outcome. This makes it all the more important for the mobile operators to act quickly to bolster their position and ensure they don’t lose out.

Graham Friend is a founding director of Coleago Consulting, a telecoms consultancy, and is the author of the recently published report, "Who will win the mobile payments standards war?"

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members.


Trevor Skinner

Trevor has worked for the GSMA for 19 years and has over 28 years’ experience within the marketing and communications sector. He started at GSMA as ‘webmaster’ designing and developing all online materials as well as handling all company related...

Read more