Mobile Network Operators revised attempt in digital commerce
For the past few years, Mobile Network Operators (MNOs) such as Vodafone and Verizon have been working hard to take a slice of the global commerce pie by advocating the secure SIMs in our phones as the centre of payments. But with U.S. operators throwing in the towel with the sale of Softcard to Google and companies like judo providing secure hardware-free payments, the MNOs are beginning to recognise that their monetisation ticket may lie in their massive number of customer relationships coupled with global, open communication standards and coordination via the GSMA.
With 80% of the world’s adult population expected to buy goods and services from their smartphones in the next few years, the MNOs are vying to pry their way into (a smaller piece of) commerce via a new open offering called MobileConnect that allows consumers to share identity and payment information with partner merchants by storing their personal data with their mobile operator.
Judo’s CEO Dennis Jones received a demo this morning at Barcelona’s Mobile World Congress. The solution works similarly to Facebook Connect where the consumer logs into an app or e-commerce website with their phone number and then elects to share information with the merchant instead of manually typing it in. Designed to simplify account creation (name, address, date of birth, etc.) to speed up checkout and to help merchants reduce fraud by validating identity, MobileConnect seems to help solve the two main problems we at judo help our customers achieve: increasing conversion and decreasing fraud.
Sounds good, but can they pull it off?
In theory, MobileConnect is a hugely attractive proposition. MNOs already have most of our relevant data stored, they have a track record of keeping this information safe, and the process is impressively smooth (at least at the demo) for enrolled consumers. Instead of typing in up to 500 characters to register an account and purchase a good or service, you can be in and out with dramatically less time and effort.
That said, activating a two sided marketplace like MobileConnect is notoriously difficult and there are very few examples of large, established companies pulling it off let alone a group of them with varying motives and priorities.
In the merchant-payment ecosystem, the only true two sided marketplace created since digital commerce began is PayPal. Even innovative giant Amazon has had trouble getting traction for its Amazon Payments product. Large merchants who have customer accounts already created are fearful of bringing down barriers for their competitors. Small or start-up businesses don’t bring a significant volume of consumers fast enough. The big question here is whether or not MobileConnect will look to stand alone or to be integrated into the payments ecosystem effectively via partners like payment gateways and digital shopping carts.
If not, MobileConnect may have trouble connecting the dots.
About Judopay · Judopay simplifies in-app payments, enable frictionless checkouts and intelligently prevents fraud for leading companies globally. Our payments and mobile experts help guide businesses and their development partners to create best in class apps to make paying faster, easier and more secure. Founded by serial financial technology entrepreneurs in 2012, Judopay is backed by leading venture investors and supported by banking and card scheme partners to offer in-app payments that are simple, frictionless and protected.