By Ben Carsley, Writer/Editor (@BC_PYMNTS)
Continuing its emphasis on global reach, MasterCard held its Mobile World Symposium at Mobile World Congress on Tuesday. Quite frankly, the takeaways from some of the panel were incredible.
MasterCard invited payments leaders from North America, Asia Pacific, Europe, Latin America and Africa/Middle East to speak at five different segments for the Symposium. The conversations that ensued appeared unscripted, with candid remarks from all involved, disagreements within panels and philosophical and technical arguments interesting for any with a stake in mobile payments.
We’re going to bring you more region-specific features in the coming days, but for now we provide a summary of the Symposium’s discussions, with a key quote from each panelist and a summary of the most interesting takeaways from each of the region panels. Regardless of what area of the world you’re interested in or what subject within payments fascinates you, there was truly something at the Mobile Symposium for everyone.
“I’m a little tired of it, candidly. Who cares? NFC is a good technology and it will be there: if it is, I’ll use it, and if it’s not it’s not going to stop what I think is a wonderful opportunity for mobile. Whether it’s NFC, a QR code, a smoke signal, passing a note to a friend, it doesn’t matter.” – Paul Galant, Citi
“If you’re a merchant or a bank and you’ve been waiting for NFC to explode, without a handset it’s incredibly uninteresting. But we’re shipping 130 million handsets a year now, and if you can get even double-digit percentages of 130 million handsets, you can flood the markets. It’s the first time we’re seeing signs of NFC being more than just a promise, and market momentum actually gaining a step.” – Ryan Hughes, Isis
“We hear this argument all the time, that it’s expensive and there’s no ROI. I think the real question is: do you believe in [NFC] long-term? I agree there’s no clarity in the business model right now, there are just lines in the sand that will change in three-to-five years and in fact could turn upside down.” – Jeppe Dorff, Rogers Communications
The Mobile Symposium kicked off with one of the most candid and interesting discussions on NFC’s viability as a payments tool that I’ve ever seen. Hughes and Dorff came down in favor of the technology, of course, but were very fair in acknowledging its flaws and shortcomings as well. Conversely, Galant stressed that NFC is not integral to the future of mobile payments but was receptive to the possibility that it could one day be the predominant mPayments tech.
What was most interesting to me was that this panel danced between philosophical, logistical and technical subjects almost on a minute-by-minute basis, and delved fairly deep into each topic. You might not have walked away with an answer to the NFC dilemma after attending this seminar, but you’d certainly leave with a better understanding of both sides of the argument.
“We’re expecting all major merchants to have tap-and-go technology by 2014, so we’re feeling all of the stars aligning, with smartphone penetration getting to where it needs to be, point of sale getting to where it needs to be to drive adoption in the early phase.” – Edward Hyde, Telecom New Zealand
“Our experience and our lessons are pretty similar to other countries that have done this, because the value for payment card replacement is limited. If you just confine to that, you are not really exploiting the power of the merchant in terms of connectivity and intelligence that comes with mobile. So we think that the minimum of other value services, such as loyalty and coupons, is almost a must-have to accompany payments services.” – Tan Eng Pheng, Infocomm Development Authority of Singapore
“Osaifu-Keitai is widely accepted in the Japanese market with enabled handsets. The application is expanding, and many service providers from various industries, such as transit companies and security companies, are providing many interesting services. Mobile payments is our most popular application.” – Takashi Komoro, NTT DOCOMO
The Asia Pacific panel offered up a much more promising view of the power of NFC, with representatives from Singapore, New Zealand and Japan all demonstrating the technology’s growth and progress. Some lofty expectations were raised for NFC adoption in the near future, and all three speakers considered NFC integral to their mobile payments plans.
That being said, there was a real focus on interoperability and value-added services here, and transit and security were both cited by both Pheng and Komoro as hugely important in helping to drive NFC mainstream adoption. We’d come to see the focus on interoperability later in the day, and many this region provided perhaps the best examples of the success such cooperation can bring.
“First, customers expect a bank to provide mPayments through their phones. Second, they don’t expect to pay more for than for their plastic card. And we’ve talked to a number of retailers … and they say, ‘we do like mPayments, but unless it’s either faster, easier or helps our checkout services, we wont pay extra for it either.’” – Eric Tak, ING
“If you look at the penetration of mobile payments and card usage, there’s still a big gap between the banking customers and the mobile customers. If you can mobilize the payments, it has a huge impact on how we pay and its going to create a value for banks, retailers and operators as well.” – Ali Salci, Turkcell
“Whenever mobile wallets do succeed, the transaction flow for customers will need to be the same no matter where they are. Because if customers have to remember to use it a different way for different retailers, it wont take off.” – Nigel Shortt, Boots
“Our approach is to create a new ecosystem, not from scratch, but by working with partners. The key success factor is partnering … from my point of view it’s not technology, not NFC or whatever, it’s creating by partnering, to provide value for all parties involved.” – Peter Vesco, Duetsche Telekom AG
The European panel provided perhaps the best mix of perspectives, with operators, telcos, banks and retailers all represented from regions all over Europe. What struck me during this segment of the Mobile Symposium was that many of the philosophical debates surrounding NFC were similar to the ones echoed in the North American segment. I think there’s a general tendency to view NFC as more advanced in Europe, and while that’s true in places (looking at you, Poland), the debate is far from settled.
The European panel continued another theme from the North American contribution as well: many agree that NFC is the future, but no one agrees on who should be fronting the cost to get us there. We heard Shortt express that major retailers had no real incentive to front the massive cost yet, while Tak pointed out that NFC can undercut a bank’s own margins thanks to its instant payment capability.
“If you delve down a little further into what the consumer is looking to do, I think we see kind of a broad trend in Latin America that maybe is a little unique. There are a lot of P2P payments that are twofold. There’s a large flow of remittances from the U.S. and Northern Hemisphere into Latin America, from folks that are working … and then sending money back home. And an existing business that is very large, in markets like Peru, people are sending money back and forth. So if you look at the ecosystem that we have, it really lends itself to making that process much more efficient.” – Greg Keough, Wanda
“Thirty-six percent of the population is without a bank account, thus we believe mobile will change the way we transact in Brazil and the way we transact in the future. We are investing in this new means of payments, especially for purchases and transfers among people. We believe this is a very important instrument for financial inclusion.” – Marcello Ribeiro TrovÃ£o Fraiz, Caixa Economica Federal
“Mobile money is very important to Brazil. We see mobile financial services as the next wave of data, but it has to be structured and managed. That’s very important and there are a lot of opportunities there. We think that a new value is being created in the intersection of financial institutions and telecoms, and we want to be a part of this new value chain and capture part of this value.” – Roger Sole, TIM Brazil
With the Latin American panel, we began to a see a significant shift away from the philosophical debates dotted throughout the developed economies and towards the issue of remittances, the underbanked and financial education. Latin America served as an interesting bridge in this regard, as its largest market, Brazil, contains a unique mix of developed and emerging populations. Fraiz and Sole both touched on this mix and the subsequent challenges that come with designing what needs to be two separate business models for two distinct demographics.
We heard a lot about remittances and P2P payments in this segment as well, and how “mobile money” is a concept that needs to be available on phones with a much lower price point than many of the smartphones that permeate the North America, European and Asian markets. Keough made some particularly interesting points about his company, Wanda, which is backed by both MasterCard and Telefonica, giving it “unique resources” as it attempts to build and ecosystem using “raw materials.”
Middle East and Africa
“Africa is kind of the foundation where all this is emanating from. Necessity is the mother of invention, and the unbanked or underbanked population … in the DRC, which is a huge country, the banking percentage is less than 2 percent. Obviously the role of plastic is going to be limited … and there is a saying that if you give a bank account and a mobile phone to somebody, you change his life forever. You are giving him a facility to get into savings, loans, investments: you actually change the life of a human being.” – Jayant Khosla, airtel Africa
“The biggest challenge to me isn’t form factor, POS terminals, all those gadgets: it’s the training and education of the people. We telcos tend to talk about mobile money, it’s a great topic and everyone says it will change peoples lives, but in reality until we all put money where our mouth is and go on street and show people… it’s dirty, its not elegant, it’s not pleasant … but you have to go educate.” – George Held, Etisalat Group
“I think there’s a very common misnomer, which is that low income equals low intelligence. I don’t buy into that at all. The lowest income people tend to be amongst the most innovative when given a chance, and as long as you’ve got a service that is fundamentally cheaper than an alternative to them, I think you’ll these groups incredibly innovative.” – Nick Dent, Ooredoo
“This is a segment of population which has not been touched by organized financial services. Will they be comfortable with technology? I believe for them this is the most important piece if technology they will ever receive in their lives.” – Srinivas Nidugondi, Mahindra Comviva
The Middle East and Africa panel offered up the most debate between speakers, with some difference in opinion evident in the perceived best methods with which to teach underbanked populations about financial inclusion. Held emphasized a very hands-on approach, citing trucks going from town to town or university to university, while Dent preached more of hands-off approach. Nidugondi and Khosla came down somewhere in the middle, but seemed to side slightly more with Held’s views.
That debate aside, though, this panel provided some great insights into the challenges that those in developing economies face as MasterCard and others attempt to introduce huge swaths of populations to formal banking tools. The potential to truly change lives here is very real, but as Held pointed out until such measures are actually put in place, the pats on the back should wait.
If you attended these seminars, what did you find most interesting at the Mobile Symposium? If you didn’t, which quote most caught your attention? Let us know in the comments below!