It made headlines in Europe, but this week’s announcement that three major telecommunication companies in Germany have joined forces to bypass supporting banks in handling Mpass mobile-payment transactions is a concept not likely to quickly take hold in other countries, one industry observer says.
Telekom Deutschland, the T-Mobile service unit for Deutsche Telekom AG, Vodafone Germany D2 GmbH and Telefonica Germany GmbH & Co. OHG on Aug. 16 announced plans to register their Mpass mobile-payments joint venture as their own company, which would begin operating before the end of the year, according to statements the three companies released through Telefonica Germany.
Zil Bareisis, a London-based senior analyst for research firm Celent, has seen other mobile-payments plans start without bank support, but they eventually went back to working with card-issuing partners.
“Launching a new payments scheme is very hard and very few new ones have been successful, but I am not saying it will never work in Germany,” Bareisis tells PaymentsSource. “Most others in the mobile-pay industry have tried to collaborate with merchants and banks to create the needed infrastructure first.”
Under the new company plan, only the buyer’s mobile phone would authorize Mpass payment orders instead of routing “sensitive customer data such as bank details” to the merchant as part of the purchase process, the companies noted in a press release.
Created jointly by the three German mobile-network operators as a short message service-based mobile-payment brand, Mpass currently enables customers to make Internet purchases with their mobile phones and charge the cost to their bank accounts. But under the new plan, customers would make those purchases through a prepaid-account billing setup with Easycash GmbH, NFC World reports.
NFC World reported that the agreement sets the stage for the companies to move Mpass into Near Field Communication capabilities for point-of-sale purchases when the new company is ready to service customer payments and handle all financial and marketing tasks.
The agreement in Germany differs from those affecting mobile payments in other parts of the world, where existing providers such as Visa Inc. or MasterCard Worldwide are partners involved in mobile transactions, Bareisis says.
In the United States, Isis, the branded joint venture of T-Mobile USA, Verizon Wireless and AT&T Inc., tried to develop its own payment system at first with limited card-network participation, but they later agreed to include all of the major credit card brands, Bareisis adds (
“But I understand why the companies in Germany are trying to do it because they would like to get a bigger cut of the transaction fees,” Bareisis says. “It seems that the mobile-phone companies, merchants and banks have always struggled to agree as to what those fees would be, which is why new payments ideas are pursued.”
The German telcos indicated they would distribute new point-of-sale equipment to shop owners when it is time to convert Mpass to NFC capabilities, an expense that companies in other countries have been reluctant to pursue, according to NFC Times.
“Queues at supermarket checkouts will soon be a thing of the past,” Christian Illek, Telekom Deutschland’s director of marketing, said in the press release. “Mpass will make mobile-payment easier, faster and more secure than with conventional payment means.”
“For many years now, we have offered an interoperable payment product across all networks with payments via the phone bill,” Peter Walz, a member of the management board and director of wholesale and strategy at Vodafone Duetschland, stated in the press release. “This is now being continued in the shared Mpass activities. Retailers want standardized [services], and that is what we are giving them with Mpass.”
Baresis contends it is too early to tell what future path the companies would take in possibly opening up the process to banks and whether the Mpass system would include carrier billing, as opposed to its current prepaid-account billing setup with Easycash.
“If it works in Germany, this could be big,” he says. “It looks like they are continuing down the path of what everyone else has determined is a good way to go, or at least try.”
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