Author: Mr. Abel Garamhegyi, PhD, President for APAC, Deputy Chairman of the Board / Cellum
Mobile payment solutions have been on the market for the past 15 years. Whilst some innovative front-runner solution providers were trying to convince customers about the usability and convenience of this payment method and tried to predict the future market, others focused on vendors and how they could draw in customers. Meanwhile, only a minor group of solution providers – like Cellum for example – prioritized security. Individual transaction amounts were small, making this approach idle.
There is now a common understanding that transaction and data security have become the number one priority. Companies that were previously lagging on this front have now diminished. All key players (developers, operators) in the field of alternative payment system are aiming to develop the most easy-to-use and elaborate products and services while maintaining utmost security.
Since this kind of ‘orientation’ period is over, and security in transactions and data storage become a prerequisite, what can companies offer to differentiate themselves?
In Europe and in the US, there are various payment methods available – mobile payment is one of them – making transactions practically instantaneous. Due to the vast number of payment options on the market, it is vital for the more unconventional payment systems to be attractive, simple, fast and reliable for the end-user, affordable and traceable for the merchant, while being profitable for the developer and operator.
It is a challenge indeed. Traditional payment providers have been developing their infrastructure and ecosystem for years, investing large sums of money whereas with mobile wallets there is a misconception that marketing efforts are unnecessary, considering they are ‘self-selling’ and ‘trendy’ products.
This misconception might be one of the reasons why the big hit has not arrived yet and card payments are still dominating the digital transaction market.
In Asia on the other hand, the majority of the population still doesn’t have a bank account. As cash can be a hassle, not to mention the security risk, e-money quickly penetrated the market and has been on the rise since. Systems, balance handlers, payment engines and gateways, and mobile applications were rapidly developed, albeit many faced security challenges. Considering that end-users had limited options, they started using these payment methods intensively, creating a new need: scalability.
Most of the technology providers had not experienced such a boom in their products that emerged in Asian countries, which comes as no surprise, as in the past these solutions were useful, ‘nice to have’ but not a necessity. Companies are now facing technical issues as well as architectural limits in their software.
Responding to the rapidly growing demand and large number of players in the payment space, in countries such as Indonesia has led seeking out new features on the e-money service. Facilitating payment, even the most sophisticated ones are not enough to gain extra market share; mobile applications must offer additional benefits in order to secure daily usage and attain customer retention. Such value adding benefits may be loyalty schemes, coupons, vouchers or gift cards. The building blocks of these services are very similar to payment (balance handling, transaction flow) on the other hand the expertise of Cellum could be useful for wallet owners in implementing the latest security solutions.
These value-added services are driven by data; data about customers, their payment behavior and patterns, when and how they redeem coupons and vouchers, where, when and how they collect and spend their loyalty points, etc.
As Ms Ginni Rometty (CEO of IBM) stated in 2013: ‘I want you to think about data as the next natural resource for the next century. ’The importance of data is continuously and rapidly increasing. Data collection, the ownership of it and the way we utilize the collected data for a good purpose will be the next elements of success in the payment area, especially when it comes to mobile payment
In a nutshell, companies in the mobile payments industry had to reinvent the unique selling proposition of their products, even before they had become dominant in the market. Continuous innovation is especially important and more vital now than ever before. The key to success is anagile and flexible approach – what we follow at Cellum –and is also where the real opportunity lies for small and medium players.