By Paul Skeldon, reporting for Bobsguide
A shiny new venue awaited the Mobile World Congress (MWC) annual mobile industry trade show in Barcelona, Spain, last week at Fira Gran Via, but in some ways the 2013 show, running 25-28 February, was more like the old days with Visa, MasterCard and handset manufacturers like Samsung dominating the event, and Google staying away. The MWC 2013 show focused on mobile money and building the uptake for near field communication (NFC) technology to support contactless payments, attracting 72,000 attendees and 1700 exhibitors, and financial institutions were as keen as ever to try to grab a slice of the mobile channel before someone else does.
MWC 2013 reminded me of the old days pre-2007 when the mobile industry trade show was dominated by mobile network operators (MNOs), handset manufacturers and card schemes, such as Visa and MasterCard – there was no huge Google stand this year, for instance, and Apple was, as ever, absent. Apple is never a big player at this particular mobile event, of course, preferring to remain aloof on the sidelines, but Google has in previous years had a stand so big that it featured a slide and robots. This year the American technology giant was almost non-existent. And Eric Schmidt, executive chairman of Google wasn’t there either – despite having given the keynote speech at the show in 2011 and 2012.
But while this made for a curiously ‘old skool’ event where the likes of Nokia and Sony dominated the mainstream headlines with the launch of new devices (it was like the last six years never happened!), Google did give one major MWC 2013 speech – about the Google Wallet.
This was significant because mobile money and payments become one of the ‘de facto’ themes of this year’s MWC event. Indeed, the mobile money industry is expected to grow from $13.8 billion in 2013 to $278.9 billion by 2018, according to a study released by global research group Markets and Markets.
Visa and MasterCard Announcements
While some of the big names in today’s mobile landscape such as Apple and Google were missing in 2013, the show did feature some big announcements from Visa and MasterCard as the two vied to bring mobile payments – and NFC technology in particular – to the masses.
While us Apple mobile users may have felt a bit out in the NFC cold at the show, as the iPhone5 still doesn’t support NFC, Visa announced that it has signed a deal with the Korean handset maker so that Visa Mobile Provisioning Service (MPS) will work on Samsung NFC enabled handsets. In addition, Samsung has agreed to load Visa’s payWave applet onto its NFC devices.
Visa’s MPS deal with Samsung is significant for the banking world as it means that next generation Samsung handsets will have NFC and financial institutions (FIs) will be able to load payment information over-the-air (OTA) to secure chips in the device. This, along with embedding payWave into handsets suggests that soon off-the-shelf Samsung phones will be able to deliver integrated mobile payments and a personalised Visa service to users. It is a key move in getting mobile payments – not least NFC enabled mobile payments – up and running and marks a bold move for both Visa and Samsung.
"We all know that the centre of commerce will be these devices," said Jim McCarthy, head of global product at Visa. "It's not just about using these devices to pay, but also the fact that today in the Visa ecosystem we have 30 million merchants. The fact is there are over 7 billion of these devices that can be turned into terminals and turn consumers into merchants for payment."
To achieve this Visa has taken the wise step of opening up this process not only to handset makers such as Samsung (not Nokia, who’s star continues to fade), but also to third parties and merchants, which will be key to getting mobile payments out to the masses.
One of the beneficiaries is Monitise, which is a long-time partner of Visa. [you can read the MWC show preview from Richard Johnson, Monitise’s strategy director here -Ed]. Monitise will be developing a remote payment platform for Visa so that the company can start to make offerings globally, but with the relevant local branding, such as Movida brand in India.
"Visa can’t do this alone," said Bill Gajda, global head of mobile at Visa, adding that adoption rates and usage patterns will vary by market. "Where banks can get access to those devices and that alternative secure element (SE), you're going to be able to create your own mobile wallet built on your mobile banking application that includes NFC payments. And we're going to be able to use that Visa payWave app that's already on the device that's out of the factory, as well as our provisioning service to get all of your accounts onto those phones," adds Gajda, speaking at the Mobile World Congress.
Monitise is also a nice indicator of how mobile payments are taking shape, announcing at MWC that the value of payments and transfers initiated via the Monitise Enterprise Platform is now more than $31 billion annually, compared with $10 billion a year ago. Its global ‘Mobile Money’ business is now handling 2 billion transactions each year, compared with 480 million in February 2012, underpinned by registered customers climbing to 20 million from 6 million in January 2012. North America is growing into a significant market for Monitise too with 10 million direct registered end users.
MasterCard used MWC 2013 to roll out MasterPass, an enhanced version of its PayPass mobile wallet. This will support checkout services for merchants through a gamut of technologies, including NFC, QR codes, tags and mobile devices at Point-of-Sale (PoS) terminals. The card scheme will be rolling these out in Australia and Canada throughout March, and aims to have more PoS installations in the US, UK and then eventually Belgium, Brazil, China, France, Italy, Netherlands, Singapore, Spain and Sweden by the end of this year.
MasterCard now has 27 financial institutions, 21 technology partners and 16 merchants on board for the MasterPass effort as it looks to expand to more than 5,900 merchants worldwide. The company also announced new partnerships at MWC with mFoundry's mobile banking solutions and the Orange MNO.
Finally, MasterCard released a new study at MWC 2013 – in partnership with Prime Research – that found that “early adopters have a 58 percent favourable rating of mobile payment technology, while those yet to adopt have a more positive outlook overall at 76 percent”. At least they all seem to be barking up the right tree.
Near Field Communication (NFC)
The show’s focus this year on NFC was clear and marks a thermo-nuclear push at getting the technology to finally be adopted large scale across the financial services and m-commerce worlds. The drive was certainly helped along by the GSMA (the mobile organisation that runs the MWC show) integrating NFC into its show guides and, more presciently, as a means of payment in the cafes and bars at the new Fira Gran Via showground in Barcelona, Spain. In the city itself, there was also ‘The NFC Experience’, which made me think of a Jimi Hendrix tribute band for some reason, but was again designed to encourage NFC consumer uptake.
The NFC-enabled app that sits behind the ‘Experience’, came together as a partnership between the GSMA and CaixaBank, Gemalto, Telefónica Digital and Visa Europe, and formed – along with a totally mobile-enabled fake town – the centrepiece of this year’s show.
“The NFC Experience provides attendees with the opportunity to experience first-hand the potential that NFC technology holds both throughout the Mobile World Congress venue and in Barcelona," said Michael O'Hara, chief marketing officer of the GSMA on the opening day.
While the NFC technology on display as part of the ‘Experience’ was impressive, there was one tiny flaw that more clearly demonstrated the problems with NFC, rather than showcasing what it can do: the handsets. To get the NFC Experience to work, the GSMA had to hand out 3500 NFC-enabled Sony handsets to a tiny proportion of the 72,000 attendees and press so that people could actually use it. They also stuck EUR15 of spends on each one to encourage usage.
This is a tacit – and costly – admission that most people don’t have an NFC handset. In fact, looking around at the delegates of mainly VP-level execs, CEOs and techies, most had Samsungs or iPhones – which rendered the NFC experience dead to all but a few.
And this clearly shows the problem with NFC: no one has a handset that does it yet and, while the NFC world waits for this to happen, other payment technologies are going to start to become the means by which consumers pay for things using their mobile phones. If the sector is not careful NFC could be bypassed before it truly takes off.
In fact, while NFC technology was all over MWC 2013 – and I and many others never really got a chance to use it thanks to our Apple iPhones – it could be argued that it is just being pushed for the sake of it. There is no clear evidence that anyone wants to use it. Rather the contrary.
Research published at the show by eMarketer points to proximity-based payments not being very popular in the US (though it does cover itself by appending an all-important ‘yet’ to that statement). According to its research, however, PoS payments using a mobile phone as a payment device – whether via NFC or other contactless technology – will total just $640 million this year.
But that's an increase of 283% over last year's even smaller base, and a number that will rise a further 234% by the end of next year. By 2016, proximity mobile payments will have exploded in the US, and total transaction value will hit $62.24 billion.
Conclusions: PayPal On the Horizon
However, it isn’t all about NFC and other technologies and potential large scale players were also discussed at MWC 2013. While the big guns at Visa, MasterCard and Google hogged the spotlight at the show, PayPal announced that it was revving up its own mobile payments offering – and that it saw no need to get bogged down in NFC. PayPal’s thinking bypasses NFC completely. You simply pull out your phone on the way to a store, open the PayPal app to make your order and pay for it in advance. When you arrive, the cashier already has your picture and your order and hands it over.
Whatever the complexities, consumers are going to see banks, carriers and card companies scrambling to have them start paying with their smartphones this year. The ecosystem has yet to be finalised but all the players are aligning and banks and other financial services providers need to ensure that they remain a part of the developing mobile channel.
• Paul Skeldon is a freelance mobile technology journalist, regular attendee at MWC, and author of a book entitled ‘The Business Guide to M-Commerce’.