Mobile Banking, Payments and Commerce: What Mobile Operators Really Think

Mobile operators think end-user transaction fees will be a leading source of their revenue in the mobile transactions space. However, financial institutions and card networks are not likely to share the wealth.

Boston, MA, December 3, 2007 – A new Impact Report from Aite Group, LLC gauges mobile operators’ current perceptions about mobile transactions. It aims to define what mobile operators really think about the evolution of mobile phones to provide banking and payment functionalities. Perhaps more significantly, it examines how mobile operators expect to generate revenues from these functionalities.

The report, titled “Mobile Banking, Payments and Commerce: What Mobile Operators Really Think,” is based on an October 2007 survey of 12 international mobile operators, and provides information on their perceptions of mobile banking, mobile payments and mobile commerce. It reveals that operators’ greatest motivation for deploying such services is enabling new revenue streams, and that they see revenue generation stemming largely from fees per end-user transaction in all three areas of mobile transaction services. However, the reality is that the larger industry does not widely support such fees for operators. In fact, mobile banking services are overwhelmingly offered free of charge by institutions at this time, and financial institutions and card networks are reluctant to share transaction fees from mobile payment services with mobile operators. Only in the area of mobile commerce might operators find an easy inroad to revenue generation through transaction fees. It is the one area in which financial institutions have historically played less of a role; as mobile operators have already established business lines around the sale of digital content (i.e., ringtones), the leap to full-blown mobile commerce will be far less dramatic.

“Although this runs counter to the ideas of the financial industry, mobile operators are confident that they will be able to generate revenues from fees per end-user transaction for all forms of mobile transaction services,” says Nick Holland, senior analyst with Aite Group and author of this report. “However, banks and card networks have expressed that they are unlikely to allow this to happen. Operators are much more likely to generate revenues from end-user subscription fees for mobile data access, as well as from mobile advertising and from handset upgrades to support contactless technology.”