Poland is gearing up to dominate Europe’s mobile payments, as six of the country’s top banks join forces to rival credit cards.
The country’s six top banks, including the largest lender PKO BP, revealed a new initiative to develop a payments infrastructure for mobile phones by Christmas 2013, reported Reuters. This project has significant implications since it represents the first in Europe to be supported by financial institutions instead of mobile network operators. The banks are hopeful that the project will serve as a model in Europe, and believe it will strongly encourage both consumers and merchants to adopt mobile payments.
The Polish banks that are participating in the payments precedent include Alior Bank, Bank Bank Millennium, Bank Zachodni WBK, BRE Bank, ING Bank ÅšlÄ…ski and PKO Bank Polsk. Together, these banks account for about 70 percent of the Polish electronic banking market, which means there is great potential to develop influential standards. There have been efforts to develop similar mobile payment systems in EU countries such as Spain and the UK, but Poland is the only country experimenting with complete FI support.
According to Finextra, the program is based on PKO Banks’s IKO mobile app, which was previously launched in March 2013. The new project will allow customers to make payments in-stores and cash point withdrawals by punching in a code that is provided by the app. Users will be able to send money transfers to individuals by submitting their mobile phone number.
If the first FI-backed mobile payments system proves to be successful, major credit card companies, such as MasterCard and Visa, could be in trouble. The payments system in Poland remains dominated by MasterCard and Visa, with the exception of smaller merchants that still prefer cash payments.
Bank Millennium CEO, Boguslaw Kott, told Reuters, “This will be a more competitive system compared to the credit card system. The credit card system will probably be put under a question mark in the future.”
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However, MasterCard and Visa won’t go down without a fight, and have revealed plans of their own. Both companies said they are working on the development of mobile payment programs, as well as virtual wallet solutions to curb market competition.
“We are convinced that the initiative, which covers with its scope 70 percent of bank clients in Poland, stands very good chance to become a commonly used standard,” said Mateusz Morawiecki, chairman, of the Bank Zachodni WBK management board.
None of the participating Polish banks hold a dominating position, but each will be submitting its own extra features and platforms into the project. And don’t forget, six heads are better than one.
To read the full story at Reuters click here, or to read the full story at Finextra click here.
