With the penetration of smartphones, mobility-centric e-commerce is on the rise around the world. In fact, last year, several mobile communication companies, including mobile network operators, major telecommunications infrastructure handset manufacturers, and even Internet companies announced their entrance to the mobile payments market.
Getting significant attention is Alcatel-Lucent’s (News - Alert) Mobile Wallet Service (MWS). It provides payment and marketing services to operators and enterprises in a “white-labeled” Software-as-a-Service (SaaS (News - Alert)) model.
MWS leverages the growing global acceptance of the Near Field Communications (NFC) standards for close proximity data interchange between NFC devices like smartphones and NFC-equipped point of sale (POS) devices. It is designed to replace one-way communications of legacy RFID implementation with a powerful two-way capability, including with unpowered NFC chips called a “tag (News - Alert),” to enable acceleration of the emerging use of handheld devices as literally mobile wallets.
Mobile services ubiquity is also helping drive the market, along with standardization and smartphone adoption. It is having a major impact on the business-to-consumer relationship, as it touches the core of retail commerce. Customer acceptance is also a factor being eyed by retailers. Consider for example that on average, today’s paper coupons yield a redemption rate of only .5 percent, whereas early results for personalized coupons delivered through mobile phones have achieved redemption rates of between 15 percent and 50 percent.
However, mobile payments will not replace paper money or hard currency anytime soon. “Just like the Internet, the mobile world will indeed change the business model again, but it will not replace the existing; it will extend it,” according to a recent (and soon to be published) Alcatel-Lucent whitepaper, “Beyond Mobile Payment: How Mobile Wallets can bring value into the NFC ecosystem.”
The mobile payment system needs to provide the ability to support all the customer interactions through all the channels and respond to customers’ increasingly individualized demands and to the more unpredictable patterns of payment behavior, according to the whitepaper.
Alcatel-Lucent’s MWS service is a build-up of a mobile payment framework with generic application enablers like the mobile wallet and of various mobile payment applications, which are enabled by the platform. The payment framework can handle triggers from a variety of sources (i.e. contactless, SMS, USSD, mobile application, web) and initiates the right action based on the event dispatcher and workflow engine.
Payment applications enabled by the payment framework include:
- Proximity payment (including loyalty and marketing)
- Person-to-person money transfer
- Remote ticketing and online commerce
Considering its ease of use and the growing penetration of smartphones around the world, mobile payments will become more and more the norm as financial institutions are testing their capabilities.
As noted in a recent blog by TMCnet Contributor Beecher Tuttle, “Service Providers Positioned to Benefit from Consumer Interest in Mobile Wallet Services,” mobile operators are in a prime position to ride the mobile wallet market. Indeed, as the smartphone continues its inexorable march to being our mobile Swiss army knife for a myriad of transactions that are part of a connected lifestyle, services such as MWS are going to be critical additions to service provider application and content value chains that are based on using NFC as foundational technology for their mobile commerce ecosystems.
Erin Harrison is Executive Editor, Strategic Initiatives, for TMC, where she oversees the company's strategic editorial initiatives, including the launch of several new print and online initiatives. She plays an active role in the print publications and TMCnet, covering IP communications, information technology and other related topics. To read more of Erin's articles, please visit her columnist page.
Edited by Peter Bernstein