Can you get one step ahead of the regulatory curve and what would this look like?

 

I’ve been studying with interest the European Commission’s proposed new legislative package for payments and digital commerce in general. Clarifying position with regards to mobile commerce and alternative payment systems is part of a trend we see around the world where players had so far been operating in a relatively fluid state with mobile payment services subject to reactive governance controls. This causes compliance confusion alongside both technical and strategic uncertainties.

And it will probably get worse before it gets better as no one is certain of the shape market convergence will take, how regulators around the world will react and what effect this will have on services.

Of course there is another way of looking at this. End user confidence (and therefore adoption) of new payment platforms and digital purchasing models will be dependent on the regulatory environment and many of the key issues regulators and policy makers are focusing on, including security, identity, choice, ease of use and fair pricing.

So could regulation and policy be used as a future indicator of successful business models rather than just as a compliance responsibility? And if so, how many organisations fail to look for and harness the opportunities that these standards and supervisory guidance could be highlighting for us?

If you analyse diverse and recent trends, throw some original thinking into the mix, take a hard look at what is happening now in mobile payments and what the end-user experience could ultimately look like then wouldn’t this give you an edge when forming your strategy or future proofing your technology?

 

imageI think so and I’ll be exploring this in more detail at www.mobilepayments-rri.com in November.

Mobile Money in China – a classic example of Digital Money

Many a brave pioneer has attempted to break into the highly desirable China payments market without success. Yet as the first foreign licenses are granted and PayPal awaits theirs, other global providers question whether it is once again time to venture east. The Shift ThoughtDigital Money in China 2013” provides a guidebook to would-be marketers, with unique insights on the current state of play and potential navigation strategies for each category of player. It will not be possible to succeed in Mobile Payment and Mobile Money without understanding the larger context of Digital Money .

image

The size of the prize

It does not take long to convince any senior management team that the potential of the China payments market is massive. Homogenous, large segments do exist within the population of 1.35 billion. This major and rapidly growing economy is rapidly opening up to new technology and electronic commerce. Alipay, part of the mammoth Alibaba group has long ago claimed to have users in excess of the number of customers PayPal has world-wide, with a reported 550-700 million registered digital wallet holders.

Now they, along within an army of 250 other would-be payments providers equipped with third-party payments provider licenses are rapidly seizing key segments. Over 2013 the trend is for them to offer mobile wallets to their existing digital wallet customers. Historically Shift Thought believes this is the first time that new mobile services can start up with an existing captive base of hundreds of millions who can use the services on cheap smartphones through high speed mobile internet connections.

“Big hitter” providers hail from across multiple industries

The way this market has evolved is unique, as is the sheer variety of heavy-weight players bearing down on the alternative payments scene. The Chinese banks, now some of the largest companies in the world, are finding themselves at the starting line, as are the very large mobile operators. The relatively young and highly nimble payment operators grew beyond recognition, on the back of an SME market eager to do business on the Internet. Now they are using widely available, cheap smartphones and mobile internet technology to offer their digital wallets as mobile wallets to a captive consumer base of merchants and consumers shopping on the go.

Of the 32 services that we at Shift Thought monitor, there are many that present opportunities in China. Starting with Online Payment, we note large numbers of online banking, mobile banking and mobile payment users. Money transfer has been a highly desirable market, both within the country and internationally. The largest number of people in the world travel over the Chinese New Year, an indication of how many people live and work away from home and have a need to send money home.

The perils of the Chinese market

Since before 2005 many have attempted to break into the Chinese market. Large foreign banks and mobile operators made do with small shares in large companies, as the only foothold that could blossom into something larger. However let alone mobile wallets, even mobile payments and mobile banking progressed at a snail’s pace as the authorities experimented with multiple standards before determining which to back. Local companies enjoy multiple advantages. Regulations come from many directions, and not unlike the US, this is a country where you simply cannot count on a single standardised market.

So why is 2013 different?

Payment providers grew rapidly in the absence of regulation, reaching a point where they presented a threat to a number of incumbent players. New regulations have forced them now to obtain licenses. Already many tranches of licenses have been granted; the latest ones even include foreign companies.

Meanwhile mobile payment standards are being finalised, and this should address the current problems of highly fragmented markets. There has also been a rapid spread of high speed mobile networks, and cheap smartphone handset to utilise the services.

The role of Digital Money

China presents a classic example in support of the Shift Thought Digital Money approach. Services started strongly on the Internet and have now gone mobile, in contrast to a number of African countries that grew on the M-Pesa Kenya model.

Regarding the relative importance of digital money services, China currently has the largest number of online shoppers in the world estimated at $1.29 trillion for 2012, with 220.65 million users in June 2013. Unless would-be new entrants understand the various existing dynamics and key players, they stand to risk losing out as the mobile money market explodes over 2013 and beyond. With the need for local partners, it is possible that large global players find themselves having to sit out the dance while their competitors take to the floor.

A navigational tool for the complex China payments market

Having attempted to enter this market on behalf of large mobile operator groups, global banks and money transfer operators, we at Shift Thought recognised the need for a navigational tool to steer entrants in their ambitions relating to entry into the China Payments market. Our latest report “Digital Money in China 2013” was written at the request of some of the most renowned world payment experts who had no means of obtaining the knowledge elsewhere. It offers an introduction to the complexities of the China payment market, regulations and timeline. It provides a complete guide on the ecosystem, with details on each initiative, player and partnership.

Our goal has been not just to deliver actionable insights to mobile operators, financial institutions, payment providers and vendors world-wide, but to also offer practical, concrete ways to progress on the insights. There are links to the websites of all the important regulators, providers and players, as well as details required for building your business case. Market segment and services are explored in detail to track the progress of e-money in the Chinese market.

As Europeans change the way they pay, card fraud reaches lowest level since 2007

 

As card payments grow in importance as the preferred way in which people pay, the good news is that the level of fraud using cards decreased by 5.8% since 2010. This post offers insights from the latest ECB fraud report alongside our analysis of the way people pay in the EU area, to help payment providers prioritise their support to payment instruments and consider the impact of fraud related issues in accepting payments.

Continue reading

The France Telecom Group turns completely Orange

 

As the France Telecom Group completes rebranding to Orange, this post offers a snapshot on the Group’s origins in Europe and its current focus on emerging markets in Africa. This will be useful to readers seeking partnerships with large operator groups across multiple countries, or for competitor analysis.

 

Continue reading

Malala’s vision for Pakistan and Digital Money

Did you watch the amazing speech of Malala Yousafzai addressing the United Nations on July 12, 2013 as part of her campaign to ensure free compulsory education for every child? It is up to us to move from platitudes to action in realising her vision. How can Digital Money help?

 

Continue reading

Get inside your competitor’s head with the Shift Thought Digital Money SAGE

 

Although mobiles and smartphones present an exciting new dimension for consumer payments, the Shift Thought Digital Money SAGE offers payments providers a panoramic view, so as to prepare for the eventual growth that is essential for building alternative payments services.

Continue reading

European privacy action–what effect on the Google wallet business model?

Pressure mounts on Google, with the ICO (in concert with 27 data protection authorities across Europe) yesterday issuing their notice. How does this impact Google’s fundamental business model in payments, and what possible knock-on effects may we expect on new entrants with digital wallets based on similar models?

Continue reading

Netherlands retail payments cost EUR 1 billion less per year than European average

The Netherlands has long been one of our “model countries” for Digital Money. Retail Payments results recently released show why. While cash withdrawals are falling, card payments have increased and there is clearly a higher value of card payments than cash. De Nederlansche Bank (DNB) worries about how  to “keep the cash chain alive” unlike India, Nigeria, Indonesia, China and other emerging countries whose top priority is to  go cash-less / cash-lite.

image

Continue reading

Before you launch your next mobile payment service – have you checked for patents?

New entrants into Mobile Payments must be aware of the intense patent related activity in this space and their projects need to include activity to mitigate risks, better compete, obtain a negotiating position in collaborations, create assets and better identify and leverage unique capabilities.

Continue reading

New mobile payments standards in China – how will they shape markets worldwide?

 

In China online payments took off since 2009 and reached mass markets, triggering the release of third party non-bank payments provider regulations in 2010. With digital wallets from providers such as Alipay enjoying 500 to 700 million registered users, we’re talking very large mass markets here. Now the same looks set to happen in mobile payments. This blog shares Shift Thought analysis from our recently published “Digital Money in China” viewport.

Continue reading