Not so long ago the future of mobile payments depended on a complicated web of relationships between MNOs, TSMs, handset manufacturers and banks—the focus was almost exclusively on the hardware and related security, often at the expense of the end-user experience and business model.
Then last year, everyone’s favourite shaker-upper, Apple, asked “why can’t we have the best of both: hardware security and simplified delivery of consumer experience?” Samsung has since followed their lead with another twist altogether.
Certainly when Google bought one of the largest remaining MNO M-wallet players—Softcard (formerly ISIS)—and promptly shut it down, many observers assumed this was confirmation that MNOs were completely out of the game. Rightly or wrongly, drawing links to history where outside innovation upended MNO business models for messaging, music, apps etc., it appeared that payments were going to follow the same fate. Where two years ago MNOs owned the game, recently pundits have been asking if those same telcos should turn in their jerseys.
But this week, those pundits are being forced to reconsider. Vodafone, the second largest telco in the world, has made a massive play in mobile payments—launching their own payments app, and forcing us to revisit the value and relevance of the MNO in payments.
Surprised? Don’t be. MNOs have a long history in the payments space and not so long ago they were the dominant player. They have a wealth of expertise and assets that extend a lot further than just the SIM. The announcement shows us that in this industry, nothing is set in stone and there’s always room for a shakeup.
Let’s not forget, Vodafone is behind what is arguably the most successful mobile payment program to date (M-Pesa)—not to mention a base of roughly 450 million subscribers. If anyone can do it, Voda can. They have reach, they know the consumer, and they know loyalty and marketing.
My prediction? This will be a model we’ll see more of: telcos responding to the likes of Apple by stepping up and simplifying their UX and using tokenization for simpler onboarding. Banks and consumers will respond to the added security of a hardware solution and the familiarity of their mobile network.
Going forward, mobile payments will be a beautiful mix of hardware and software solutions, offered by banks or handset manufacturers or MNOs—with tokenization as the common denominator, and end-user experience and value-added services separating the winners from the losers.