At a press conference in Berlin today, Deutsche Telekom and MasterCard today announced a European partnership to enable consumers to use their mobile phones as a convenient and secure way to pay. The partnership aims to make mobile payments a reality for Deutsche Telekom’s 93 million mobile customers across Europe.
The first consumer roll-out will take place in Poland later this year – primarily due to the more advanced NFC infrastructure available throughout the country; there are already over 150,000 POS contactless readers available in Poland today. For Germany, NFC transactions have less than 1% penetration rate, although Deutsche Telekom claim that they expect consumer transactions to rise to about 30% over the next few years. German consumers will be introduced to mobile payments, initially in a trial with mobile phone tags and cards, continuing into the first half of next year with a mobile wallet service which will also be open to other issuing banks and partners.
To ensure that all corners of the market will be covered – not just mobile payments, Deutsche Telekom will be issuing both plastic cards, NFC-stickers as well as the NFC-enabled SIM cards. All possible purchasing methods will be tied to one account. Deutsche Telekom will issue the MasterCard products via its subsidiary company ClickandBuy, the owner of an e-money licence and Deutsche Telekom’s London-based online payment service. ClickandBuy will have the rights to issue the cards and NFC-stickers across Europe.
The Czech Republic and Hungary were also highlighted as Eastern European countries that will follow once their NFC infrastructure can support wide scale mobile payments.
With the mobile wallet being realised in the environment of the SIM card of the smartphone some considerable benefits are open to the consumer: not only is the payment transaction secure (which Deutsch Telekom highlights as the primary element that will convince Germans to adopt mobile payments) , but the consumer has continuous and complete transparency and control; each transaction will be confirmed via a text message. There is also the extra benefit of the consumer data itself being held in a cloud environment – not on the phone itself; seen as a further security measure.
Commenting on the partnership, Mr Thomas Kiessling, Chief Product and Innovation Officer for Deutsche Telekom said, “This is a huge step on our way to increase mobile payments. With MasterCard we have a well-known and experienced partner generating growth in this important market segment. We want to build a comprehensive ecosystem around mobile payment, helping Telekom to realize its strategy of being the first choice for customers regarding connected life and work.”
Interestingly, Mr Kiessling, also pointed out that as well as NFC /contactless payments, Deutsche Telekom would also be incorporating QR codes and other payment methods into the wallet although he declined to give further details – a pre-emptive move against Apples Passbook (out later this year) perhaps? When pushed to explain who Deutsche Telekom saw as their main competition for the mobile wallet Kiessling mentioned PayPal and Apple as the key guys to beat. Interestingly, no Google Wallet. Asked why Deutsch Telekom wanted to get into the mobile wallet arena, the company said they consider this to be the next logical step for an MNO and that already today there are over 40 NFC-enabled handsets on the market, of which 10 of these fall into their portfolio today.
Both sides obviously see Germany and Easter Europe as ripe for mobile payment adoption; after the fact that countries such as Spain, France, the Nordic regions and the UK seem to be racing ahead. MasterCard has worked hard to convert younger generations to adopt mobile payments though their youth marketing campaigns – typically based around music. Deutsche Telekom are to adopt a far more cautious approach in educating Germans in the benefits of mobile payments. Their strategy is to use unattended POS terminals (that’s vending machines to the uninitiated) as their stalking horse.
Ultimately, both companies agree that for mass adoption to take place it will come down to the purchasing experience as a whole – not jet the payment experience. Commenting, Ann Cairns, President, International Markets for MasterCard Worldwide said, “I think that when you are buying something, you are not thinking about the actual payment method, you are thinking about the overall shopping experience and if you move to mobile then the experience can be very rich. You can browse before you buy, you can have couponing, you can have an after-sales experience that includes telling your friends how it was; it’s the complete value chain and payment occurs some place near the end of that value chain. Consumers are not thinking about that at all, they are thinking how easy was this for me, was it safe and was it a smart way of doing things?”