Experts predict mobile payments plans will have major impact on retailers

Experts predict mobile payments plans will have major impact on retailers

Visa and Vodafone announced a partnership at Mobile World Congress in Barcelona recently to introduce a mobile wallet.

The deal is the largest of its kind between a global payment network and mobile operator and is aiming to bring Visa mobile payment functionality to Vodafone mobile customers around the world.

It will introduce a Vodafone-branded stored value mobile wallet account based on the Visa prepaid account, while Vodafone and Visa said they would work together to enable Visa issuers for mobile payments globally.

The partners also declared the m-payments platform would be open to all partners of all relevant industries, including financial institutions, retailers, transport and utility companies to host their services within the new Vodafone mobile wallet.

Meeting m-payment demand

But industry experts are divided on quite how much this deal will immediately impact retailers. Catherine Haslam, analyst at research company Ovum commented that Visa’s announcement has the potential to fill a significant hole in the current payments ecosystem.

“A major barrier for many operators is the need to build a relationship with one or several financial institutions in order to offer services. Such negotiations are typically long and complicated and this would replace it with a simple contract with Visa. In effect Visa is doing what it’s been threatening to do for several years and expanding its traditional intermediary role in payments to mobile. The fact that it is also supporting non-Visa payments shows that the payments giant recognises that ubiquity is the key to success in mobile money systems.”

However, Haslam warned Visa is not walking into an open market, where retailers have a major role to play. “It faces competition from international financial hub systems, such as the M-wallet and HomeSend services offered by international carrier BICS. A bigger barrier, at least in the short-to-medium term, is that the system relies on the NFC in the consumer device and PoS [point of sale], and that is a long way from critical mass.”

Fitting technology to requirements

Clive Kahn, chief executive of payment technology provider CardSave, said the idea of mobile payments was not a new one but, with the launch of this service, it is likely that m-commerce will finally become a tangible, mainstream technology for the consumer market.

But Khan warned that only larger retailers may immediately benefit: “While the system will benefit the consumer, and Visa of course, it might add extra pressure to small businesses, which will have to upgrade their payment technologies.”

While most card-taking businesses now use chip and PIN devices, Khan pointed out that they will have to invest in near field communications (NFC) contactless payment systems in order to accept mobile payments. “For many merchants this will come at a cost, and only a few quality payment solutions providers, such as CardSave, will supply this for free,” he said.

“In the long term though, mobile payments will be beneficial to all businesses, including small independents, as transaction times will be quicker and consumers spending power will no longer be limited by the amount of cash they have in their pocket,” he concluded.