PYMNTS.com asked Soren Bested, Monitise Americas‘ Managing Director, to answer five burning questions on the mobile platform wars and its impact on the payments industry.
Soren Bested has been with Monitise Group since 2007. His primary responsibility as Managing Director for Monitise Americas is to extend the Monitise Ecosystem within the U.S. by expanding relationship with cellular carriers, financial processors and institutions, card issuers and transaction networks.
What’s the most significant payments application for mobile platforms that you’ve seen in the marketplace and why do you believe it is significant?
The breadth and scope of using mobile phones in payments are such that it is difficult to pick one application. Each market, and indeed each segment, has seen a different application which calls for the immediacy, convenience, cost effectiveness and security of mobile payments – no one application is any less important in its own setting. For instance, for an under-banked prepaid card user in the US, a simple balance check via text from the mobile phone or an alert when a tax refund is paid to their card would be the most significant application, while the ability to get access to financial services for the first time would be the most significant application for an unbanked customer in Kenya. For a financially adept and time-poor customer in the developed world, the ability to use ‘dead time’, e.g. when commuting, to do important financial transactions like transfers and payments would be more significant. Hence, Monitise’s products and services are designed to support all of these applications.
What are the three most important applications that you believe will be developed and deployed for mobile platforms in the US in the next year? In developing economies?
Will mobile phones change how people shop at the point of sale and if so how?
Mobile phones add the possibility of using a personal, secure and connected device to initiate and authenticate transactions at the PoS. The extent to which this possibility is turned into reality would depend on the maturity of the PoS and payments infrastructure in each market. For instance, in developed markets, where there is an established PoS acceptance infrastructure, technology like NFC offer an unprecedented opportunity to reduce costs and increase consumer engagement. However, this is still evolving and needs many factors to come together for its full potential to be realized.
On the other hand, in emerging markets the mobile is already having an impact for people without cards and merchants without PoS by providing a new device for initiation and acceptance. In developed markets, where there are PoS terminals, it will only be as NFC and other contactless technologies develop that we will see change. In emerging markets, the mobile device is already having an impact for people without cards and merchants without PoS.
How does Google’s Android operating system and mobile strategy stack up to Apple’s iPhone and does Google have any advantages?
From a feature and current roadmap perspective, Google’s Android OS and the iPhone OS are pretty comparable. For example, both support large touch screens, allow storage up to 16Gb, have integrated GPS, as well as access to thousands of apps directly from the handset. And we’d expect relatively little to differentiate the companies going forward from a feature and functionality perspective.
However, the interesting aspect here is the difference in approach that both companies are taking to the market. Apple operates a relatively closed system, tightly integrating and controlling the go to market plan, all the way from handset design, integration with iTunes and the app store, to exclusive distribution arrangements. Apple’s strategy is to target the high end of the device market, maximize profitability on its hardware and services and build consumer loyalty in the process (if not devotion!) On the other hand, Google takes a more open approach: it is attempting to lower the cost and broaden the distribution of smart phone devices by making its OS available for free in an effort to drive innovation amongst OEMs and application developers. So, Google is targeting a broader segment of the market and is aiming to distribute its software (ie products such as Google maps and Gmail as well as the Android OS itself) across as many handsets as possible with the ultimate aim of capturing market share leadership in the mobile advertising and search business, just as it has done in the online world.
So, even though both companies compete in the global handset market, they really have very diverse strategies with different underlying drivers – and as such it is difficult, if not inappropriate, to pick an outright winner.
Will the mobile platform wars make the widespread deployment of contactless at the point of sale more or less likely and why?
There is little doubt that the pace with which mobile banking and payments is becoming mainstream could promote the short-term deployment of contactless PoS. The commercial model behind this deployment continuous to be an issue – with recent initiatives being halted on this account. The combination of these factors and the continued slow progress towards NFC can only increase the likelihood that alternative contactless approaches emerge.
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