MocoNews points out that PayPal is advertising open positions in “PayPal Mobile, signaling its intent to get into the mobile payments space. The listings describe PayPal Mobile as “a dynamic, young ’start-up’ business unit within PayPal dedicated to bringing value-added mobile payment services to consumers and merchants.” Of course, this is the same unit they pointed out in November 2004, and PayPal’s WAP service is still hanging on.
So many mobile payment companies described themselves as “like PayPal for mobile”, and it was always assumed that eventually PayPal would come in and own the space. The thing is though, most mobile payment systems are still a product in search of a market. Who needs PayPal-style mobile payments, really? The idea of using your phone to PayPal a merchant for purchases really isn’t that compelling when you’ve got credit and debit cards and good old cash, and reverse billing to a mobile phone bill works pretty well for mobile content.
Some of the contactless IC payment systems, like the ones used in Asia, are pretty interesting — but the payment stuff there is really just a sideline to all the other applications enabled by the robust and powerful platform carriers there are using. There’s a reason why the history of the mobile industry is littered with failed mobile payment companies. It’s got nothing to do with technology, marketing or implementation (though that often leaves something to be desired), it’s because there’s really little value in it for people in mature markets. There are plenty of existing payment mechanisms that satisfy people’s needs; mobile payments don’t promise to simplify things, or offer much benefit over them.
In emerging markets, however, there’s a huge opportunity. People are already using airtime as currency in some places, and Globe’s G-Cash system in the Phillippines is probably the best example of a mobile micropayment system. The opportunity for this type of m-banking, whether it’s “official” and run by a bank, or a more de facto or improvised system is huge. Several companies are already working in these areas, and they’ll find much more success than PayPal, or anybody else, pushing mobile payments in Europe and North America.
Mobile content people who get all excited about the prospect of an alternative billing system for purchasing ringtones, wallpapers, games, and other mobile content items … with the hope of smaller billing margins … are forgetting some important issues:
1. Customers prefer content billed to their phone bill (P-SMS). It’s “low friction” and because the purchases are added to an existing phone bill it’s almost ‘painless.’
2. The Carriers have no incentive to make a alternative payment system easy to use. Therefore if you want to have SHORTCODE ordering, or even do a binary SMS WAP-PUSH of the content, you’ll pretty much have to use P-SMS. Want to make life difficult for your customers? Force them to enter a lengthy URL into their WAP (mobile) browser.
“reverse billing to a mobile phone bill works pretty well for mobile content.”
It works pretty well except that the carriers take a huge chunk of the proceeds. The expectation is that PayPal will take a much smaller percentage, equivalent to what they do online. If an online store is offering a mobile game for $4 if you have it charged to you phone bill or $2 if you use PayPal, I bet a significant number of people would choose the PayPal system.
I assume that because you’re accessing the mobile web through your phone PayPal can authenticate the device, which would be linked to your PayPal account. I see this being used to pay for mobile content via the mobile web rather than for payments in physical stores — I’m with you on that one.
And I agree that the interesting things in mobile banking are happening in Africa. There’s one country that has a full bank accessible through mobile phones, which is way ahead of anywhere else…
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