Operators’ Cut of PSMS to Fall

penguin.jpgIf you asked 100 penguins in the wild if they’d like Killer Whales to eat fewer of them next year, I’m pretty sure they’d overwhelmingly say yes. In an astute follow up question, they’d also probably agree that Killer Whales will eat less of them – if you’re an penguin, living in a dark, cold and pretty inhospitable environment, optimism has to be pretty high up on your ability to believe you can survive. After all, if you started to think “brrr…but it’s sooo cold…” life isn’t going to be very enjoyable.

So when payment enabler, Valista¬†(PR-led survey bias alert) questioned penguins delegates at Mobile Content World¬†last week about operators’ cut of PSMS revenues, surprise, surprise, 65% of respondents believed that it should fall to less than 20% in less than 3 years. And a further 18% felt it should fall to less than 5% – which would be in line with credit card payments, for instance. Currently, it’s around 40- 50%.

I assume that the other 17% of the respondents were operators, or maybe some killer whales snuck in – did anyone notice?

Of course, just because the outcome of this survey was patently predictable, doesn’t mean to say that its conclusion is invalid. As I wrote earlier this week, the current share of PSMS is unfair and needs to fall if operators are to maintain a place in the mobile payments value chain. While their huge slice of the action can perhaps be justified¬†while they are both payment enablers and the principle marketing channel, they might be able to get away with this. But with the rise and rise of off-portal, the marketing role is no longer going to necessarily be valid, making it increasingly difficult to maintain these kinds of margins for payment provision.

This leaves them very vulnerable to another payment system launching, bypassing operators entirely, leaving them with no role in mobile payments. This will be a great shame as, in my view, the mobile is poised to take over the role of cash, dwarfing today’s already huge mobile payment ecosystem.

Surely, mobile operators need to be thinking about pre-empting this inevitability and start getting competitive now.

News just in: Turkeys vote to abolish Christmas.


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