EC drafts m-payments blueprint
The European Commission has recently published, as a discussion document, a draft blueprint for mobile payments, writes John MacGowan of Bloor Research. The purpose is to "accelerate the deployment of mobile payments throughout the Union" and is aimed at consolidating the views and recommendations of the financial institutions and telecoms sectors.
Recent meetings between the major players, from both sectors, have highlighted the differences in their:
- respective strategies
- attitude to risk
- interpretation of the legal position and perceived obstacles
- ideas on how to charge for mobile services
- which technical standards to adopt
- attitudes to security infrastructure.
- Consensus building at a European level, is therefore seen as a priority, augmented by a proposed "top-down" approach to compliment, what have so far been regarded as, "bottom up" activities.
Strategically, it is fair to say that the blueprint is intended to serve as a means to "accelerate market developments which no organisation or groups of organisations acting alone could have achieved". Other issues critical to the Commission are that having implemented the Single European Currency (the Euro), the Single European Payment Area - part of eEurope 2005 - is "within sight".
The Action Plan (for eEurope 2005) has two relevant objectives, namely:
Interoperability. By end 2003, the private sector should have developed interoperable e-business solutions for transactions, security, procurement and payments; i.e. facilitating mobile commerce.
Reduce barriers to broadband deployment (including 3G Communications). By promoting use of open platforms for access to applications and services; primarily through digital television, 3G mobile technology and platforms available in the future.
The major perceived obstacles, between the aforementioned sectors, are:
Business requirements: Given the sums paid for 3G licenses and the costs to develop new products/services, the network operators need to maximise their ROI. The banks take a more 'laid back' attitude, wanting to avoid the effects of disintermediation and not wanting to open up the market to new [competitive] entrants.
Investment protection: The general uncertainty over the enthusiasm and take-up of 3G services, likely time scales to profitability, etc have led investors to be cautious and to keep "their powder dry".
Business complexity: Current arrangements have raised the point that a choice of mobile service provider should not be dictated by specific marketing alliances/agreements initiated between mobile network operators.
Contract management: To permit new 'mobile communication service providers' to enter the market and to function independently from network operators.
Security approval and certification: The Industry, and involved parties, to establish a security working party to evaluate and adjudicate on these issues.
Distribution channels: Use of open architectures for mobile payments may require specific agreements in the secure distribution of confidential documents, personalised SIM cards, encryption keys, application downloads, etc.
Resolution of the value of mobile payment transactions (macro and maximum), dual slot devices, dual SIM cards that are EMV compliant are all intriguing possibilities mentioned in the draft.
It's a good start, with many a hurdle to overcome, nevertheless the question of being able to make interoperable mobile payments will ultimately effect us all.