Mobile transfers

Operators and end users stand to gain from the rise of mobile transfers, according to Juniper Research.

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By  Juniper Research Published  September 19, 2008

Operators and end users stand to gain from the rise of mobile transfers, according to Juniper Research.

User demand for convenient and intelligent ways in which to make payments for goods and services using a mobile phone is creating exciting opportunities for those organisations that are part of the mobile payment ecosystem.

The ecosystem includes mobile operators, banks and credit card companies, retail merchants and transport operators, handset manufacturers (and their suppliers), and a range of new software and system vendors and service providers entrants eager to put their innovative mobile payment solutions into the hands of mobile phone users.

There is significant opportunity to create profitable services to handle even small money transfers and payments, and for mobile network operators to derive additional and much sought after ARPU from handling transactions.

The definition of a mobile payment is often open to interpretation and can differ from source to source. Juniper Research has a simple definition of a mobile payment a "payment for goods or services with a mobile device such as a phone, PDA (Personal Digital Assistant), or other such device."

As is the case with other, older, payment schemes like cash, the current mobile payment market does not have a single, definitive, payment method and there is substantial variation between what particular scheme is adopted from region to region.

Mobile payment schemes vary from the remote methods, such as PRSMS (Premium Rate SMS) schemes for paying for digital content dominating in Europe, to the physical, whereby, in regions such as the Far East and China, users take their mobile phone to the physical storefront to pay for goods via contactless credit/debit card schemes.

There are many different and often competing categories of mobile payments currently available. Juniper Research has identified two distinct categories based on the location of the mobile user in relation to the merchant:

• Remote Mobile Payment: this is when the storefront, shopkeeper or retailer is remote to the mobile phone user, e.g. paying for digital goods or physical goods via a mobile web enabled retailer.

• POS (Point of Sale) Mobile Payment: this is when the storefront or retailer is physical and the user is located at or near to the storefront or retailer.

Typically in the future this type of payment will be via Near Field Communications (NFC) technology integrated into devices. Mobile payment applications and services are already available in most regions in a variety of formats, and where they are being adopted, either in trial or commercial mode, the user feedback has been very favourable.

Juniper Research further segments remote payments into the following sub-segments:

• Remote Digital: defined as remote purchases of digital goods and services via a mobile device, which is also the point of delivery. Examples include music (ringtones), tickets and games, with prices typically between a few cents and US$20.

• Remote Physical: defined as remote purchases of physical goods and services via a mobile device - examples could include almost any consumer items from clothing to electronics equipment to books and CDs. Essentially this is the mobile equivalent of regular online purchases of similar items from a desktop or laptop via a fixed internet connection.

• Remote Person-to-Person: this area is the focus of this study and is defined as a money transfer between two mobile phones, which can be redeemed for airtime, cash, or used to pay for bills or goods by the receiving party. Typically these services are provided using SMS, a downloaded application, account based or a phone browser.

PAYMENT SCHEMES: The big picture

The following table details the different types of mobile payment schemes in each segment. Whilst the classification is by no means definitive, it does provide a structure for organising and evaluating the numerous distinct types of mobile payment schemes in this fragmented market. It is important to note that service providers quite often straddle the categories shown here.

This market has generated a lot of interest from the mobile payment ecosystem recently. Person to person payments are when funds are transferred between mobile phone users and then the funds are redeemed for airtime, goods or cash at selected merchants.

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