What does the mobile internet mean for payments by phone?
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It would be easy to spend this entire column talking about the iPhone, but I'm not planning to.
While it's brilliant that the device has put usability on top of the mobile agenda, the hype is deafening. The assumption is that European operators are all blindly scrambling to win the iPhone contract, come what may. While having the iPhone would be a PR coup and could draw in some high-revenue users, the reality is likely to be rather more complex. And although the iPhone's user interface is revolutionary, it's regrettable that just as mobile operators are moving towards increasing openness around mobile data services, another large, influential player presents the mobile content market with a proprietary platform.
Openness has worked well for operators before. It's the basis of premium SMS. Transactions is an area where operators have done very well. Crucially, though, this has happened with help of aggregators pushing for commonality and making it easy for third parties to adopt the solution.
Mobile transactions have flourished despite the well-known fact that mobile content providers have had to learn to live with operator revenue shares of as much as 50% in many cases. While the third-party providers might grumble, using premium SMS or WAP billing as the payment mechanism has proven important enough to still allow the model to work.
But with the increasing promotion of internet on mobile, this could be challenged.
Consumers have proven to be more than willing to purchase via digital platforms, and ecommerce is becoming an interesting alternative revenue stream for TV players and other media companies. More and more well-known branded sites are looking to lead consumers by the hand towards shopping possibilities. This may be by buying goods shown on-screen or developing niche retail propositions linked to the content. Those sites enabling you to store your credit card details to make transactions easy are also only increasing.
So, if you use the internet on your mobile and pay for goods via internet payment mechanisms, why not extend that to mobile content and services as well?
The caveat is that where mobile really excels is in micro- rather than macro-payments. But if you could easily use, say, your Skype credits as payment, would that be so different to pulling it from your pre-pay mobile account?
These developments are some way in the future, but they're certainly not inconceivable. The point is that, while so far there hasn't been any really credible, mass-market alternatives to going through the operator for mobile payments, that's likely to change.
The mobile payment channel has to step up to that challenge. Payforit, the cross-operator WAP billing endeavour, isn't quite enough. If there are good alternatives where businesses get a far greater share of revenues, they will move there.
Europe's mobile operators could choose to take the initiative and drive mobile as a payment mechanism by making revenue splits more generous and further improving interfaces. After all, it's always better to have a smaller share of a bigger pie than dwindling revenues when competition bites.
It's also good to make a calculated move to grow business, rather than risk being forced onto the back foot once other providers encroach on your turf. By staking a legitimate claim now, the mobile industry can position itself to take an even bigger share of both internet and TV interaction, and be more assured that it can hold onto mobile payments too.
