Ready to M-pay?

Mobile payments have barely made an impact on Middle East markets, but with liberalisation forcing operators to search for more innovative services we could see the offering arriving soon.

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By  Alex Ritman Published  September 7, 2006

|~||~||~|At last year’s Gitex event in Dubai, UAE incumbent Etisalat was describing its up and coming mobile-payments service that would allow for all variety of purchases using a customer’s handset. But a year on and we’re yet to see the service surface. While there are many complications, with agreements having to be secured between banks, the operator and the sellers, the regional landscape may be nearing one in which such m-payment methods could become viable. One of the few regional m-payment offerings has been functioning in Kuwait following an agreement with MTC-Vodafone and the National Bank of Kuwait (NBK) in 2004. Known as M-Net, it allows customers to make payments in certain shops, home delivery suppliers and even transfer money between accounts (assuming they are both with NBK). While around 30-40% of all NBK customers are signed up to the service, the bank admits that by far the largest majority of the transactions are for low-value services, such as purchasing takeaway pizzas. For the operator, there are considerable complications in organising such m-payment solutions. They have to sit in the middle of the transaction, providing the infrastructure and security. It is the operator that must ensure that the security runs from the handsets all the way down to the end of the transaction, to the issuing bank. But for all this investment and responsibility, at first glance there doesn’t seem to be much financial benefit to the operator, aside from perhaps a small amount from payment charges. However, such immediate financial gain is perhaps not the main reason that operators are looking towards m-payments. One of the major benefits of the service to operators is its effect on customers, increasing loyalty as they look for more innovative services. In Japan, m-payment offerings are already leaps and bounds ahead of most other markets, with users able to use their mobile phones like a credit card in shops, as well as for issuing plane boarding passes and train tickets. Even though the offerings have been around for some time in Japan, m-payments only make up around 2% of number one operator NTT DoCoMo’s overall revenues. However, the operator has experienced a significant reduction in churn and this could be the major source of interest for Middle East operators. The region is slowly starting to experience the sort of liberalisation already seen for a number of years across the more advanced mobile markets, and with many countries having penetration levels nearing or even over 100% the pressure is on operators to be innovative in their offerings. As the drive turns from customer acquisition to retention, operators need to launch new services and lifestyle facilities to their customers. M-payments could be one of these services. Etisalat has now said its m-payments service will be launched towards the end of 2006 or early 2007, having delayed the launch to ensure that it could offer fully-fledged solutions. Trial screen shots of the service already show that the operator is lining up purchases for taxi rides, cinema tickets and also parking fines and utility bills. By the time it does launch, maybe there will be some news on the eventual arrival of its UAE competitor, du, to make customer retention an issue for Etisalat. ||**||

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