Mobile payment services that align with relevant communities are more likely to be successful, and national communities are shown to be relevant for certain P2P and POS payment cases in Switzerland, Singapore and Tanzania.
Twint and Paymit are merging to form a national mobile payments system in Switzerland in a highly fragmented industry and in the face of competition from Apple Pay, HCE NFC based players and others.
Recent Developments in Switzerland and Singapore
Within the last couple of months, the Monetary Authority of Singapore announced that it is considering mandating a national mobile payments system for peer-to-peer (P2P) payments, whilst the sponsors of Paymit and Twint in Switzerland have announced that they will merge their respective offerings to create a consolidated national mobile payment system.
Fragmentation in the Payments Industry
Worldwide, the competitive forces in the sector are building, and indeed one of the biggest barriers to consumer adoption is the confusion caused by fragmentation. Existing and potential providers include the smartphone OEMs, the banks with their own HCE-based mobile wallets, mobile messaging apps, PayPal & other international wallets, mobile operators with their mobile money wallets, carrier billing aggregators, and retailers with their closed-loop wallets. Surely there is a case for consolidation?
B2C open-loop mobile payments can be broadly categorized into P2P, POS (off-line) and online/in-app payment services. A mobile payment system that aligns with a relevant community has a better chance of success. Community alignment is particularly important for P2P payments. A community could be defined in many different ways – it could be focused or broad, but needs to capture clusters of people paying or transferring money to each other. For instance, this could be a WeChat user community in China.
Mobile Money and National Communities
National communities are definitely important for P2P payments, as demonstrated in mobile money use-cases, such as in Tanzania, which was the first country in Africa to introduce an interoperable mobile money market in Africa, where the three mobile operators came together to allow their subscribers to send money across networks irrespective of their network. Tanzanian ownership of mobile money accounts surged from 1% of the population in 2009 to 32% in 2014.
A national mobile payment system can sometimes have an advantage in POS payments, where it is aligned with the POS specifics of a particular national market. In Switzerland, the leading POS terminal provider, Six Payment Services, now supports the Swiss Paymit app on its new POS devices.
Another example of POS payments benefitting from the specifics in a national market is the highly successful eNETS EFTPOS service in Singapore, formed in 1985 as a subsidiary of the major banks. eNets allows consumers to use their ATM cards at merchant POS terminals, with the payment amount directly deducted from their bank account (as an alternative to Maestro or Visa debit cards settling through the card schemes). The service is ubiquitous, effective, and costs merchants less.
Key Success Factors for B2C Open-Loop Payments
There are many key success factors for B2C open-loop mobile payment services such as being a trusted provider, scale, support for multiple payment categories, better user experiences, cost benefits and integrated loyalty services. In the case of Switzerland, a combined Paymit and Twint service would have the support of the major Swiss banks, the leading POS provider and retailer groups.
Importantly, the combined service would provide payments in all three categories: P2P, POS and on-line/in-app payments, with a competitive advantage in both the P2P and POS payment categories through national community alignment. Equally important, the user experience could be simplified if the two services shared a unified wallet.
About the author:
David Keast is a serial entrepreneur, advisor and mentor, having co-founded and built 5 start-ups on 3 continents over the past 20+ years. He co-founded Lotaris in 2008, a global mobile licensing and payments company based in Switzerland. He is now a partner at Corniche Growth Advisors, a Swiss-based entrepreneurial corporate development firm that helps grow mid-market/growth companies in the Mobile Payments, IoT and Developing Market Applicable sectors, through both organic go-to-market strategies (building new business models, strategic partnerships, target segments/customer-types, channels and geographies) and inorganic (buy/sell-side M&A and capital raising) strategies, while actually validating strategies through market engagement.
