First announced in January at the Consumer Electronics Show, the Visa Mobile Platform initiative, developed by Visa International's Strategic Partnerships and Innovation group, has the ambitious objective of laying "the foundation for the commercial availability of mobile payments and services to millions of mobile users around the world."
What Visa's been doing is working with selected mobile and related-technology vendors to define a core set of building blocks - a mobile platform - that allows Visa member banks to begin the process of taking mobile payments trials to market.
Today, a bank wanting to trial mobile services with a group of its customers would have to spend a lot of time sorting through the various vendor offerings in the mobile space to select and then integrate the best-of-breed components to build a mobile payments service suitable for conducting a consumer trial. With its Mobile Platform, Visa has short-circuited that process on behalf of its member banks - enabling them to get into the market with mobile services trials much faster. The end objective in this initial phase is to support a much more rapid learning from actual consumer trial experiences as to what features are really most important to consumers in a mobile payments service.
To help simplify the myriad choices among the various technologies and providers, Visa has made some simplifying assumptions in assembling the Mobile Platform. One example is limiting the market opportunity for trial of contactless payments to only new handsets containing the necessary NFC and other technologies required to support secure mobile payments for contactless POS applications. By not attempting to support the thousands of existing handset models - which simply can't support contactless - Visa clarifies how the contactless use case has to be supported for any trial - thereby avoiding all of the hassles of trying to layer on mobile payments onto today's mobile installed base. Visa is promising to add other mobile payment service use cases (remote commerce, person-to-person payments, etc.) over time to the Mobile Platform. Some of those services may end up being capable of supporting a subset of existing handsets.
It appears the most significant trial announced by Visa to date is the one announced on February 8 by SK Telecom and Visa for Korea. Visa had worked together with SK Telecom several years ago in deploying infrared-based POS technologies for local payments using mobile phones. The new trial, built upon components of the new Visa Mobile Platform, is focused on enabling mobile handsets provided by SK Telecom to be personalized with payment card information over the air from the consumer's financial institution. Once personalized over the air in the fashion, the handset is fully capable of functioning as a contactless payment "card" for local POS purchase transactions.
Glenbrook believes one potential concern for Visa could be the seeming acceleration in decisions being made by larger banks in the US to deploy mobile banking capabilities in 2007. Several large banks have announced mobile banking initiatives with more decisions expected soon. Once a few of the majors move, the rest of the industry seems compelled to respond. However, currently Visa's Mobile Platform focuses primarily on the "hard problems" of mobile payments, not directly on the much easier requirements for supporting mobile banking. Even though it integrates some mobile banking functionality, Visa's Mobile Platform could run the risk of being somewhat less relevant to US banks in the near term as they jockey for position in supporting their near-term competitive needs to offer basic mobile banking functionality.
At Glenbrook, we'll be continuing to watch Visa's announcements regarding additional trials of Mobile Platform and look forward to hearing from Visa, in due course, about some of the learnings based upon actual consumer trial experiences conducted by its member banks.