While online peer-to-peer payments and their mobile counterparts are not new to the payments arena, the use of mobile devices to exchange payments between consumers is still in its infancy.The newly announced deal between Verizon Wireless and Obopay is novel, given the fact that a major U.S. mobile operator has chosen to partner with a startup technology vendor to support peer-to-peer payments by means of a downloadable application on mobile phones.
New research from TowerGroup finds that although this relationship is helping to move mobile payments in the right direction, they will not become widely adopted until they are interoperable between carriers, banks and platforms. Text messaging experienced a similar stumbling block when first implemented. It was constrained by the lack of interoperability for almost 10 years, in much the same way that mobile peer-to-peer payment solutions are now. Only when mobile operators provided inter-network transparency did growth of that market explode.
TowerGroup chief analyst, Bob Egan is closely monitoring the mobile payments space, alongside colleagues Jennifer Roth, senior analyst in TowerGroupâs Global Payments practice, and Charul Vyas, the newest analyst to join the Emerging Technologies practice. They have co-authored a ViewPoint tilted âMobile Peer-to-Peer Payments: Verizon Wireless and Obopay Take a Short Step Down a Long Road,â which highlights how this deal will impact the growth of mobile payments.
In this report, TowerGroup makes the following observations:
â¢ Verizon Wireless and Obopay both gain some âfirst moverâ advantage from the new service. Yet the partnership is more of a clear win for Obopay â given the breadth of Verizon Wireless as a distribution hub for the application and the validation the deal gives to the Obopay business case. Ultimately the deal itself will equate to little in adoption or revenue until a major bank comes on board for a significant roll-out.
â¢ Citi is currently in pilot trials with Obopay to provide peer-to-peer payments. TowerGroup believes that, in the long run, banks like Citi could create a bundled service enhancement for their customers that features mobile peer-to-peer payments. In such a scenario, a bank could waive fees for the service for customers who maintain minimum deposit balances or qualify for other tiered financial offerings.
â¢ To drive widespread adoption, mobile payment solutions must transcend current differences in message formats, standards, and technologies of operators, financial institutions, and vendors for funding and payment transfers. TowerGroup also believes the fees consumers pay for peer-to-peer mobile payments must be close to nothing.