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MasterCard, PayPal reveal conflicting views of mobile financial services

LAS VEGAS – While CTIA panelists were all bullish about the prospects for mobile financial services, their visions of the future of mobile banking, commerce and payments differed based on where they sit in the ecosystem.

Moderated by Tom Wills, senior analyst at Javelin Strategy & Research, the panel “Mobile Money 101: The overview course on what’s now and what’s next” spurred lively debate about the role of banks, carriers and credit card issuers, the future of mobile payments and whether or not NFC would reach the mass market as a transaction mechanism.

“We have run numerous mobile payment trials around the world, and it is on the cusp of commercial deployment,” said James Anderson, vice president of the center of excellence for mobile at MasterCard Worldwide. “Consumers want the experience and see value in the experience of making payments using their handset.

“The thing that has kept MasterCard pushing away at mobile payments is the consistently positive response we’ve received from consumers,” he said.

MasterCard is investing heavily in mobile because the company believes the channel is a game-changer for financial services.

“For me what distinguishes the mobile phone and makes it device of choice is its ability to consolidate all that the consumer wants to do with financial services,” Mr. Anderson said. “You can’t see your balance or get an alert on a card, and without mobile, you have to get a statement in the mail or go to a PC.

“With a mobile device you can consolidate all of those aspects of financial services in a way that is much more convenient for consumers, as well as the fundamental activity of going in to a store and buying things—you can’t do that with a computer,” he said.

“Mobile unlocks the user experience and takes it to the next level.”

MasterCard already has PayPass credit and debit cards embedded with NFC chips, and many quick-serve restaurants, convenience stores and pharmacies have installed contactless readers at the point of sale.

“Payments is not a monolithic domain—there’s ecommerce that will become mcommerce, POS payments and casual P2P payments,” Mr. Anderson said. “POS payment is through contactless and the technology path we’ve chosen is NFC.

“MoneySend is essentially card-to-card funds transfers mediated through the phone, and we’re working on the mobile Web—there will be no single technology because there are different use cases,” he said.

EBay Mobile has $600 million dollar business via its iPhone application and WAP site, which makes it the biggest mobile commerce entity going right now.

Its subsidiary PayPal also has several smartphone applications and is the payment mechanism for all eBay sites and applications. The company is not as enthusiastic about NFC contactless mobile payments.

“While NFC has been in development for four or five years, mobile payment is happening now, Eric Duprat, general manager of mobile at PayPal. “Remote payment makes transactions easier, so the value proposition of mobile payments is stronger, and we’ll see more ecommerce move onto mobile because the value proposition is there.

“There is a lot of savings you can provide to make those transactions instantly via mobile without intermediaries right and left to make it happen—it’s a great example of what the future can be,” he said. “The speed of change in mobile is mind boggling, and that acceleration is going to continue, innovation is going to continue, and it’s an exciting space to be working in.

“We believe that your wallet will be in the cloud—it’s important that your wallet is accessible on all devices but not reside on all devices—that’s what we need for mobile payments to become ubiquitous.”

First Data
First Data, on the other hand, claims to be the world’s largest payment processor, and is betting heavily on NFC.

“We’re developing one platform around pre-NFC and the others for preparing the market for NFC, which we believe is coming in the not-too-distant future,” said Barry McCarthy, general manager of mobile commerce and POS at First Data. “Ultimately we believe NFC will be embedded in the handset, and we have a trusted service management platform to manage payment data.

“QSRs, pharmacies and convenience store chains almost all have installed contactless readers at the point of sale,” he said. “It went from no infrastructure at the POS two years ago to substantial reach, and in the next few years we’ll absolutely see some handsets with a contactless chip installed.

“The larger the merchant, the more focus they have on cost control and speed—the larger merchants are more in favor of contactless technology.”

ClairMail powers mobile banking for six of the top 10 banks in the U.S. and two of the largest banks in Canada.

“What’s going to drive mobile payments more than anything else is mobile acceptance, so that anyone who has a phone can get paid, not just pay,” said Joseph Salesky, cofounder/chairman of ClairMail. “NFC is going to continue to progress, but it needs to make it onto handsets.

“Mobile financial services is not just banks being reactive but proactive, and assisting with other financial tasks such as payments,” he said. “We provided the infrastructure and applications technology to provide those services for their customers.

“It’s not just about convenience, but also about value.”

Qualcomm’s Firethorn
Firethorn Holdings LLC, a Qualcomm company, is taking a broader view and plans to support whatever standards emerge for mobile financial services.

“Certain vendors that don’t have the wherewithal to support multiple platforms, but we’ve decided to be open and support whatever standards come out,” said Dave Vigil, senior vice president at Firethorn. “We have multiple carrier partners, multiple financial institution partners, and we have our internal bets about what will become predominant, but we want to support everything.

“We suspect that there will be multiple support at the POS,” he said. “If we do it right, mobile payments will get ubiquitous and it will take off virally like it should.”