Telecom operators looking to introduce mobile wallet services should adopt a long-term, platform-operator perspective in order to develop a successful infrastructure whereby both service providers and customers can enjoy good quality of service.
Kyoshi Mori, mobile systems and standards specialist for NFC (near-field communications) services and innovations at NTT DoCoMo's frontier services department, said mobile wallet services are not part of the Japanese mobile carrier's "core business services".
However, it recognized the upside of such a deployment and, rather than competing with existing partners to introduce mobile payment services, NTT DoCoMo chose instead to play a "coordinator" role to build up the infrastructure and ecosystem, Mori added.
Elaborating, the executive, who was in Singapore to attend the four-day CommunicAsia tradeshow, said it did not expect to make money in the short-term from providing NFC and billing infrastructures due to the hefty initial investment needed.
However, there are still benefits to be reaped, he said, noting that since the mobile wallet service was introduced in 2004, over 60 percent of its subscriber base now use NFC-enabled mobile phones. This has helped increase data usage and establish "customer stickiness" for the carrier.
For the mobile wallet ecosystem to succeed, though, Mori advised operators to make sure they "don't take too much out from the pie" by charging service providers prematurely for utilizing the infrastructure, as this will hamper the industry's growth.
He also pointed out that the financial regulatory climate in Japan probably helped ease the deployment of mobile services, as any company in the country can start a credit card business.
However, this is not a luxury that telcos in Malaysia, for instance, can enjoy.
Hampered by regulations, backend operations
Galvin Yeo, head of financial services at DiGi, noted that a key challenge for the Malaysian mobile operator to start a mobile wallet service is that it had to comply to regulatory guidelines when it rolled out financial products. These include the "collation of proper customer documentation" which, he said, is currently not a "critical process" among telcos.
Furthermore, legacy systems may hamper efforts to update online records such as account and billing histories, Yeo told ZDNet Asia in an e-mail. Mobile wallet services will also need to be integrated into telcos' existing billing systems and retailers' point-of-sales systems to record financial transactions.
These backend operations, if not done well, may "impact customer experiences", he noted.
Ivan Lim, deputy director of corporate communications and investor relations at Singapore-based operator, M1, added that establishing partnerships with banks and payment service providers are "necessary", too.
Lim explained: "There are various solutions and devices possible in the rollout of mobile wallets, and these need to be considered by all parties to ensure user experience and end-to-end customer handling processes are secure and convenient for the customers."
These operational barriers are nothing new, though, said Yeong Mun-Ling, vice president of business strategy at StarHub.
She said in her e-mail that for mobile wallet services to be introduced, it will take time for operational issues between payment service providers and mobile operators to be smoothened out. However, Yeong noted that this process is no different from launching any other new, value-added services.
The Singapore government, for one, has been proactive in its efforts to capitalize on opportunities in the mobile payments space. In 2009, the Infocomm Development Authority of Singapore (IDA) revealed plans to facilitate the setting up of an interoperable NFC infrastructure, or a Trusted Third-Party (TTP) backbone, which would serve as the foundation for innovative NFC services.
In an earlier report, industry watchers told ZDNet Asia that technological barriers in terms of standardization and availability of NFC-enabled devices have been addressed, and it is now is up to software developers to come up will compelling services for consumers to drive adoption of mobile payment services.