Recent deals show that financial companies and wireless carriers are finding ways to work together in the fast-changing mobile payments market after years of sparring over their respective roles.
Securing the cooperation of phone companies will be especially important in less-developed countries, where consumers are often much likelier to have a mobile phone than a bank account, observers said.
Visa Inc. underscored the importance of telecom companies this week when it announced a partnership with NeuStar Inc., a clearing house that serves the communications industry.
"We want a cooperative business model between banks and carriers," said Prakash Hariramani, a senior business leader on Visa's mobile initiatives team. "We want to have a connection to this hub for operators that is NeuStar."
NeuStar manages intercarrier billing, such as when a text message hops from one carrier's network to another; it serves 4,000 telecom companies worldwide. (Its main service allows people to keep their phone numbers when switching providers.)
Hariramani said the alliance with NeuStar gives Visa access to all of NeuStar's network customers, which will be critical to the San Francisco company's goal of delivering mobile payments services around the world.
He said the deal will initially offer broad opportunities for mobile money transfers, and will eventually lead to other types of payments. "We are exploring many other applications we can work with NeuStar on," he said.
Future projects could include developing tools to identify specific handset models to aid the presentment of payments data, location-based services and other, more advanced marketing and financial applications, he said. "We're just at day one of this journey."
A NeuStar spokesman said the company would consider other deals with financial companies. Just as NeuStar provides interconnection services for the world's phone networks, he wrote in an e-mail, "we could potentially act as an integrator of other" payments networks.
Carriers say they would welcome a more constructive relationship with the financial industry.
"We're not trying to replace the banks. We're trying to partner with the banks," said Aran Hamilton, the vice president of strategic partnerships and business development at EnStream LP, a mobile-payments joint venture owned by Canada's three largest wireless carriers.
Last week EnStream unveiled its Zoompass person-to-person mobile payment system, which lets customers of Bell Mobility, Rogers Communications Inc. and Telus Corp. send funds to one another. Users can access the money with a debit card issued by Peoples Trust Co. of Vancouver that runs on the MasterCard Inc. network and is linked to the customer's prepaid Zoompass account.
Those accounts can be funded by electronic transfer or by preauthorized debits from customers' bank accounts. Hamilton said Canadian financial companies are keen to link their systems to the Zoompass network.
"We've been approached by all the major banks. They're interested in offering Zoompass to their customers," he said.
Bruce Cundiff, a research analyst at Javelin Strategy and Research in Pleasanton, Calif., said that these carrier-centric models stand in contrast to the older bank-based models, and show that both industries will need a seat at the mobile payments table.
The challenge for the two industries is to build a critical mass of users. "I think both models are viable" for delivering mobile payments services, "but there has to be some sort of network effect," Cundiff said.
Whether it is carriers or the banks, he said, "somebody has to create the utility, create the widespread adoption."
Though carriers built Zoompass, it is very similar to Obopay Inc.'s person-to-person service, which is already available through banks in the United States; Citigroup Inc. offers a version of the service to its customers and MasterCard introduced its own service incorporating the technology last week for its issuing banks.
Richard K. Crone, the founder of Crone Consulting in San Carlos, Calif., predicted a long shakeout as both the financial and communications industries sort out the new environment.
"Mobile is indeed disruptive technology," he said.
"It makes it easier for new entrants in the payments business."
Some of the new carrier-centric payment systems take banks out of the picture almost entirely.
A San Francisco start-up, Boku Inc., said last week that it had bought the mobile payment company Paymo Inc. and the Mobillcash platform developed by Vidicom Ltd. that lets users charge the purchase of "digital goods" (like ring tones, downloadable applications and music files) to their mobile phone accounts rather than to a card.
Mark J. Britto, Boku's chief executive, said the new generation of smart phones lets customers buy these goods from a wide array of third-party sources, not just the carriers' own mobile download stores.
"This market didn't exist five years ago," said Britto, a former banker who managed credit policy in the 1990s at First USA, a credit card issuer that is now a part of JPMorgan Chase & Co. (Britto went on to positions at Amazon.com and the online advertising-performance management company Ingenio, which he sold to AT&T in 2007.) "People like choices. This is another choice," he said.
In buying Paymo, Boku acquired contracts that authorize billing to the monthly statements of AT&T Corp.; the T-Mobile unit of Deutsche Telekom AG; Virgin Mobile, which uses the Sprint Nextel network to carry its signals; and carriers in 45 foreign countries.
The two acquisitions together give Boku access to more than 50 countries and 1.6 billion consumers, said Britto, who put the size of the digital goods market at $8 billion and its growth rate above 50% a year.
Boku envisions uses for its service not only in mobile downloads, but also for digital content on social networking sites, online games and other virtual worlds, Britto said.
"There are a number of business models, a number of consumer value propositions that are being tested out," he said. "There will be a lot of winners over the long run."
Another carrier-centric company looking at mobile payments is the British mobile payment specialist Mi-Pay Ltd.
The company's main business is reloading prepaid phone accounts, and it works with carriers in more than 30 countries, said Simon Caville, a founder of Mi-Pay and its director of strategy.
He said he sees the budding money-movement market as a "greenfield opportunity."
Mi-Pay works with banks in the individual countries that it serves to hold the funds and manage financial compliance, but it goes to market using the carriers' brands because those are what the customers recognize, Caville said. "It's all white-label."
In impoverished markets such as Nigeria, banks might require a $200 minimum balance and charge $20 per transaction, putting such services out of reach of most of the population, but mobile handsets work in even the most remote villages, said Caville, whose company focuses on Europe, the Middle East and Africa.
"There is no banking infrastructure," Caville said. "People don't want banking. They want payments."