New MCP partnership from MasterCard and Deutsche Telekom

2 July 2012

The Mobile Network Operator (MNO), Deutsche Telekom, has entered into a European partnership with MasterCard to encourage the adoption of Mobile Contactless Payments (MCP).

The collaboration on Near Field Communication (NFC) SIM-based chips that will allow MCP payments to be made will begin in Poland later this year. The rollout will mean users can tap their mobile handset against MasterCard’s PayPass readers at the Point-of-Sale (PoS) auctioning low-value transactions typically priced at under EUR20. Adhesive stickers will be made available for those without in-built NFC technology in their phones.

The partners are already planning a trial in Germany as well, and a full ‘wallet’ service that includes bank partners and physical High Street retailers, plus discount functionality, should follow in 2013. This initiative is in cooperation with Deutsche Telekom’s ClickandBuy unit, an e-money net-based internet service provider.

Commenting on the move, Thomas Kiessling, chief product and innovation officer at Deutsche Telekom, said: “We want to build a comprehensive ecosystem around mobile payment, helping Telekom to realise its strategy of being the first choice for customers regarding connected life and work."

Many others are competing in this crowded space, of course, hoping to win business in the fast developing MCP and m-commerce arena. Vodafone and Visa struck a similar deal at this year’s Mobile World Congress show in Barcelona, to bring MCP to customers across than 30 countries, and rival MNO Orange last week begun rolling out NFC payment technology itself in France, building on its large pilot in Nice.

Reaction and analysis
According to Angel Dobardziev, of the analysts Ovum, the drive behind Deutsche Telekom's (DT) mobile payments strategy is to create a comprehensive framework that will address many of the challenges in what is currently an incomplete ecosystem.

“DT is working to ready the market and strengthen its brand association with financial services by becoming a credit card issuer for MasterCard,” he said. "DT is looking to improve the retail infrastructure for mobile payments by acting as a sales partner for NFC-enabled POS terminals. It is providing NFC tags for consumers that do not have NFC ready devices, and taking a considered, phased approach to service roll out, which is no bad thing, starting in Poland this year and Germany in 2013.”

Ovum colleague, Eden Zoller, thinks that telco’s strategy is very broad and may be challenging to execute well in so many different areas and geographies. “DT is facing increased competition from a growing number of players with similar mobile payment propositions, including Google which, like DT, aims to differentiate itself with an integrated online and mobile payments service,” he commented. “We also see challenges with DT’s business model, which is based on a share of transactions and rental fees – we expect this to be tested by alternative models based on advertising with free services to consumers and merchants.”

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