“Let no telco be left behind.”
That could be the mantra for the mobile-payments industry as announcements of major telecommunication firms or electronics providers establishing mobile wallets continues at breakneck speed.
Two weeks after Visa Inc. and Vodafone Group PLC announced a partnership to establish a Vodafone mobile wallet for consumers in Europe, speculation increased about Samsung Electronics Co. Ltd.’s intentions to create a mobile wallet based on its Near Field Communication-enabled phones.
Talk about the creation of a Samsung mobile wallet became more apparent when the company hired Victor Kim, a former Visa director of mobile payment, as a director of global mobile commerce. Industry observers viewed the January hiring as a green light for the company to forge ahead with the development of its own mobile wallet.
A Samsung executive was not available to comment to PaymentsSource.
That Seoul, Korea-based Samsung likely would want more control over its NFC chips by creating a mobile wallet comes as no surprise to those following the technology and “politics” of mobile-wallet development.
“Samsung is a big conglomerate, with the Korean business model of vertically integrating into all sorts of different electronics areas,” Brian Riley, senior research director and analyst with Needham, Mass.-based TowerGroup, tells PaymentsSource.
As such, Samsung likely feels it needs to push its mobile-wallet development to the forefront because it already has strong links to the Google Inc. Android phones, Riley suggests.
“Every [telco or electronics] company is trying to build a mobile wallet, but they will still have to prove there is a need for it,” Riley says. “To me, a mobile wallet seems to be a solution looking for a use.”
Zil Bareisis, a London-based senior analyst for research firm Celent, agrees that mobile-wallet development has become a game in which many players seek involvement.
“It’s not surprising at all that many companies are planning or developing some sort of wallet capabilities, and that includes mobile operators and even device manufacturers,” Bareisis tells PaymentsSource. “Most of the plans focus around having a prepaid account linked to the mobile phone.”
The Samsung project is not as clear-cut, or public at this point, as the Visa and Vodafone partnership, which the companies promoted as the “largest mobile payments partnership in the world” in late February.
London-based Vodafone, a multinational telco, will work with Visa to develop a Vodafone mobile wallet based on a Visa prepaid account to offer to Vodafone’s 398 million-customer database in more than 30 countries and five continents. The companies did not indicate a specific launch date, saying only the service initially will start during 2012 in Germany, the Netherlands, Spain, Turkey and United Kingdom.
The partnership encourages Visa issuers to promote mobile payments globally while embracing financial institutions, retailers, transportation and utility companies as partners, Visa stated in a press release.
The Vodafone mobile wallet will feature NFC technology to send encrypted data over short distances to enable secure transactions, while also providing customers with coupons, loyalty program points and gift voucher credits, Visa added.
Visa Europe, the European payments system provider, supports the partnership and development of the Vodafone mobile wallet.
Bareisis says the open-loop platform ultimately will power the Vodafone mobile wallet, though prepaid accounts present challenges.
“Accounts based on open-loop schemes, such as Visa and Vodafone, can be used anywhere Visa contactless (payWave) is accepted,” Bareisis notes. “The challenge is that it’s a prepaid account, which needs to be funded in advance, making it different from the Google wallet or what Isis is building.”
The Google and Isis wallets allow consumers to link multiple payment credentials, including credit and debit cards, Bareisis adds.
In the long haul, having different mobile-wallet offerings emphasizes that multiple wallets are likely to coexist on a phone, and the future “battles” for companies will center on wallet interface and building customer relationships, Bareisis contends.
Any effort by Samsung to control the embedded chips in Google Android smartphones likely would hurt Google, but that same fear would apply for Samsung if Apple Inc. launches an NFC-based mobile wallet in its next iPhone.
Indeed, analysts who follow the technology and business developments at Apple believe the company would control the embedded NFC chip that would power its phones (
As Samsung enters the mobile-wallet market, the company joins the likes of Google, telco partnership Isis, Visa and others who appear engaged in a race in which looking over the shoulder to see what Apple intends to do plays a key role.
“Apple is the disruptive player in all of this, and they haven’t even laid out their business plan [for a mobile wallet],” Riley says. “Apple generally does not offer an open platform, and that could be an issue, whereas Google’s wallet with Android is an open wallet.”
Most observers do not expect Samsung to somehow try to strike out on its own with a new payment scheme that would rival Visa or MasterCard Worldwide. Rather, it appears the company seeks control of the embedded chips and wants to create a wallet that the card networks would embrace.
Bareisis feels it is unlikely that a new payments scheme would somehow unfold as mobile-wallet development continues.
“Most companies seem to be partnering with Visa or MasterCard,” Bareisis says.
Banks likely could have the most to lose in the long run, Bareisis suggests.
“Some mobile operators have applied for their own e-money licenses and could start issuing the prepaid accounts linked to their mobile wallets in the future,” he notes.
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