Race For Mobile Payment Revenue

The fight is already heating up. Which industry is in the best position to make the most money from the burgeoning mobile payments market?

Mobile phone carriers are building business plans that include substantial income from payment transaction fees that will be paid by users of the cell phone network. But, will the banks and card networks share the wealth?

Aite Group, LLC recently completed a study of 12 international cell phone carriers to determine what the future brings for mobile payments. Of course, it’s no surprise that the motivation for the carriers deploying mobile commerce is the potential for new revenue streams.

The carriers already have developed a revenue model based on the sale of digital content such as ringtones. Most digital content is a micropayment. It does not make economic sense for merchants to accept credit cards for micropayments. Discount rates and transaction fees make credit cards a very expensive option for merchants.

It’s an easy leap for mobile carriers to expand beyond ring tones into all digital media and capture a large portion of payments for digital goods. And, considering the consumers of digital services are primarily young, mobile payments make even more sense. For a young consumer, the mobile phone may be the only purchase method.

Credit cards and direct debits associated with cell phone are becoming common. Don’t expect the banks and payment processors to be generous with revenue earned from cards or debits.