July 31, 2009
Mobile Person-to-Person (P2P) Payments - Telcos or Banks?
In a recent report, Javelin Strategy and Research group noted that "The number of consumers likely or extremely likely to use mobile person-to-person payments and transfers has increased sharply to 26 million consumers, a rise of 24% from 2008 figures."
In the last 12 to 18 months, the increased penetration of smart phones (iPhone and blackberry in particular) have also made the opportunity for mobile banking and mobile payments more real and near term. I have been skeptical about these opportunities but I am certainly more bullish than I was last summer.
According to the Javelin report, "Smartphones are now used by 17 percent of consumers, mobile banking is used by many, and use of the internet for banking and shopping has been common for years. These are just some of the conditions that have created an increased likelihood that consumers will soon begin to use mobile person-to-person (P2P) transfers. Nearly one in three online consumers with mobile phones and one in four online consumers have an interest in using mobile P2P payments."
This also means that the stake for both banks (and financial institutions) and carriers (Telcos) has increased significantly. There are probably 3 different models that are evolving -
- Closed loop system such as Obopay and Paypal.
- Carrier centric model - I have not seen any credible models out there although both Sprint and Verizon have made announcements in the past.
- Bank centric model - that does not need any new account such as CashEdge Popmoney, MCom and a few others.
While it will be easier for the bank centric models to get adoption, in the long term, it will be still be beneficial if banks and telcos find a way to work together. Its easier said than done and I do not see bank or telco trying to work together or making an effort in that direction. Whether this becomes a bottleneck or not remains to be seen.