Mobile strategy
Launching mobile payments is a strategic decision
. Whether you are a financial institution, a mobile operator, a large retailer or any other entity - launching mobile payments services as a PSP (payment service provider) is a significant decision for every organization. Choosing the right strategy for you is the first decision that has to be made if you seriously consider becoming a PSP. It has to do with defining your goals, and you define goals by asking yourself the right questions.
Many issues need to be addressed when build your mobile payments strategy. They have to do with business model, synergies, time to market, assets you wish to leverage, branding and much more.
Technology is not a strategy
We sometime tend to forget that a technological solution is not a strategy. It is a crucial issue that has to be addressed but still - it is meant to support your strategy and not become your strategy. Choosing the right technology for your organization is something that you should do only after you are clear about your strategy. You should not choose a technology just because it is a trend. You should not choose your technology just because others do. What you should do is choose the technology that perfectly supports the goals your organization set for itself.
NFC is not a strategy
Don Kingsborough of PayPal, recently said, "NFC is a feature, not a solution that solves problems. If your strategy is NFC today, you need a new strategy"[1]. It is no wonder why Gartner stated that NFC based mobile payments is at the "peak of inflated expectations" with 5-10 years before it reached mainstream adoption[2].
NFC gets so much focus and attention these days. With numerous pilots all over the globe, one might think NFC strategy is mobile payments strategy (and vice versa). But let's not forget - NFC is a technological solution, one of many solutions out there. NFC should be examined with respect to the way it fits your mobile payments strategy. It should be examined against other technologies.
Is NFC a bubble?
During the past decade, numerous major players - financial institutions, mobile operators, retailers and others, piloted NFC technology. None lead to a commercial launch! Did they all fail[3]?
There may be several good explanations to the repeated delay of NFC based Mobile Payments launch for over a decade. But the main issue is probably the complexity of the NFC model and value chain. There are between six and nine different payers (handset manufacturers, mobile operators, credit card issuers and brands, payment service provider, POS companies) that all need to coordinate, agree on business terms, revenue, investment and liability splits and much more. They all need to agree who owns the customer.
If you add to that, the huge investment on POS terminals, the lack of supporting handsets and the time to market it takes to deploy the service on a wide scale - you can start questioning the validity of the NFC mobile payments business model.
With billions of dollars spent over a decade of unsuccessful pilots, NFC technology for mobile payments certainly doesn't seem like a success story.
The sad truth is, that in the eyes of too many potential PSPs, NFC and mobile payments go hand in hand so closely that NFC has become their mobile payments strategy. It would not be an exaggeration to say that NFC is actually prevents mobile payments from reaching mass market like it should.
DigiMo solves it all
In an interview to the Financial Time, Benjamin Ensor, of Forrester Research said "we think there is quite a big chance for a disrupter to come in, perhaps using existing processes and networks in a new way that is faster, cheaper and better"[4].DigiMo does just that. We addressed exactly those issues that currently prevent mobile payments from happening and successfully solved them using existing processes and networks.
DigiMo has the only mobile payments solution that requires no hardware add-on on the POS side and on the handset side. Furthermore, implementing the DigiMo solution does not involve any changes to the existing POS software, and no integration is needed.
Using existing credit card processes, the DigiMo solution is based on a slim value chain, supporting all existing handsets and all types of POS.
The outcome is clear - DigiMo solves the complexity of mobile payments. With a slim value chain and no capital expenditure on hardware and integration - DigiMo supports a lucrative business model and can be implemented on a wide scale within months.
It is clear that the market is long ready for mobile payments. Both merchants and users have matured. The time is right today for the bubble to burst and clear the way for alternative, low cost, simplified and straightforward solution that actually supports a valid business model.
[1] http://gigaom.com/2012/01/14/paypals-don-kingsborough-in-store-payment-is-ours-to-lose/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+OmMalik+%28GigaOM%3A+Tech%29
[2] http://www.gartner.com/hc/images/215650_0001.gif
[3] Over 6 years ago NFC was presented in MWC in Barcelona as "the most promising new wireless technology to hit the market in recent years" http://www.businesswire.com/news/home/20060207005492/en/Philips-Samsung-Telefonica-Moviles-Espana-Demonstrate-Simplicity
[4] http://www.ft.com/intl/cms/s/0/befd3b54-3bd6-11e1-bb39-00144feabdc0.html#axzz1jVifDlOv