Amorphous Rise of Prepaid Mobile Commerce Stands to Hasten Banks Disintermediation, Threatening Traditional Current Account Services and Banks’ Relationships with Customers
25 June 2014 – The rapid convergence of prepaid and mobile commerce is creating significant opportunities for merchants and other stakeholder groups to push banks and other day-to-day money management service providers down the value chain further and faster than ever before. This is the view expressed by Mobey Forum in The Prepaid Mobile Wallet: Taking Prepaid into Account, the latest instalment in the global, bank-driven business association’s series of mobile wallet white papers, published today.
The paper contends that innovative prepaid service models and ‘second generation’ mobile wallet solutions are mutually supportive. When combined, each will drive innovation in the other, creating a powerful catalyst that will propel both prepaid and the mobile wallet industry forward and into markets that have, until now, been majority controlled by banks, such as the provision of day-to-day current account services.
“As prepaid has developed its popularity has soared, but this is just the beginning,” comments Amir Tabakovic, Board Director and Chair of the Mobile Wallet Workgroup, Mobey Forum. “The rapidity with which these solutions are evolving, together with the potential for future prepaid current account services to be offered to mobile wallet users, makes the future for traditional banks in this space unclear. What is certain, is that banks must now recognise prepaid as a major driving force, not only in the future of mobile wallets, but in wider mobile financial services. Banks must also recognise that if they are to successfully establish anything more than a back end processing position in the mobile wallet value chain, they must accept that the wider development ecosystem has neither the need, nor the appetite to wait while they find solutions to their problems with regulations, operating procedures and legacy systems integration. This is especially so when prepaid represents such a familiar and widely deployed model to so many stakeholder groups that are vying for market dominance, including merchants, MNOs, e-money providers, payment schemes and a whole variety of over-the-top players.”
The Prepaid Mobile Wallet: Taking Prepaid into Account paper analyses the intersection of prepaid commerce and the mobile wallet, in order to present strategic options for banks seeking to respond to the emerging threat from prepaid mobile solutions. The paper explores the broad spectrum of prepaid mobile applications and analyses solutions from providers such as Google, Apple, Starbucks, AtB, American Express and T-Mobile, together with examples of how forward-thinking banks such as Danske Bank and PostFinance are responding to the market’s changing dynamics.
“The introduction of Host Card Emulation is likely to inject further energy into the prepaid model,” continues Tabakovic. “It will enable merchants and other players to issue secure closed loop mobile prepaid solutions via an NFC payments model that is much simpler than that offered by the current hardware-based secure element ecosystem, while still benefitting from the merchant’s contactless acceptance infrastructure. Indeed, once HCE technology has matured to a state of full market readiness, it may be possible for merchants to disintermediate banks, MNOs and payment schemes from their mobile prepaid products altogether, by offering secure HCE-NFC payments to customers via their own closed loop solutions.”
The Prepaid Mobile Wallet: Taking Prepaid into Account is available for download free of charge from the Mobey Forum website: https://mobeyforum.org/whitepaper/prepaid-mobile-wallet/ .
Industry stakeholders can find out more about the Mobile Wallet Workgroup and how to participate by attending the third annual Mobey Day taking place in Barcelona from 7-8 October. For more information on this event and to find out more about becoming a member of Mobey Forum, visit https://mobeyforum.org/.
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About Mobey Forum
Mobey Forum is a global, bank-driven business association working to accelerate the evolution and adoption of mobile financial services. Established in 2000, it brings together leading financial institutions, mobile network operators, mobile handset manufacturers and payment processors and vendors, committed to accelerating the mass-market deployment of user-friendly mobile financial services by promoting open and secure technology standards.