Telcos Have a Unique Opportunity to Drive Mobile Payments
We are witnessing a significant and inevitable shift in digital payments towards mobile commerce. In the next ten years, we will see an exponential expansion in the number of devices and applications we will use to make mobile payments. You could pay for your groceries on your mobile, for delivery at home, then two days later receive a message from your fridge alerting you that the milk is running low. By the time you get back home, a new bottle of milk could be waiting for you, thanks to real-time delivery, even by a drone.
However, currently only 3% of all mobile payments spend is billed by telcos. For telcos to gain a share of the mobile payments pie and avoid being disintermediated, they must proactively add value to the payment process. According to a recent analysis carried out by telco experts at ACI Worldwide and Red Dawn Consulting, we believe that telcos have an opportunity to increase their mobile payments revenue at least fourfold by 2022.
Telcos as a hub for the digital marketplace
For this cross-functional environment to work, we believe the market must move from fragmented to integrated. We see telcos as a hub for the digital marketplace: as an integrator for devices, applications, methods of mobile payment and customer identity management.
We believe that the mobile device, which is kept on standby 96% of the day, can play a central role in consumer payments, both online and in-store. To resolve the complexity of mobile payment options, the market needs an aggregator. We believe telcos have the technology know-how, as well as the subscriber base advantage to be that aggregator, and also help with identity management. To become that aggregator, telcos need a robust payments solution, one that can handle more transactions, increased fraud risk and be able to create a seamless customer experience.
Building strategic relationships with merchants, consumers and technology platforms is crucial
From the arrival of Paypal in checkout pages to the incorporation of NFC technology in smartphones, the mobile payments market is moving toward improving customer convenience. The most innovative convenience-enhancing solutions are the ones that connect the dots the quickest, particularly between customer and payment: think peer-to-peer transfers via Facebook chat for Transferwise account holders, the Telstra One Number, which uses e-SIM technology to allow voice and data sharing across devices, under one phone number. Or the millions of Chinese WeChat and Alipay users who pay for products by scanning QR codes from newspapers, online adverts or smart TVs.
What can telcos take away from these examples? Firstly, the e-SIM makes it easier to use the consumer’s telephone number as a quick authentication method across devices. The data gathered from device-specific payments and traffic can be analysed to understand and monetise consumer interests. Telcos could also play a role in the increasing move to peer to peer payments.
By building strategic relationships with merchants, consumers and technology platforms, major disruptive players (such as Uber, Apple and Paypal) deliver frictionless, real-time payments to consumers. We believe that telcos have a unique opportunity to drive mobile payments - by building on direct carrier billing through multiple payment options, data management and seamless fulfilment - to the next level.
Andy McDonald will speak in-depth on this topic during the ACI 'Power Hour' session at Mobile World Congress 2018: ‘Retention, Risk and Reward: The Mobile Payments Opportunity for Telcos.' Thursday, March 1, 2018 , Hall 8 Theatre F / 11:30am to 12:30pm.
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