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"Simpay withdrawal disburdens efficient national mobile payment solutions in Europe"26.06.2005 - (idw) Universität Augsburg
In February 2003 the four major mobile network operators Orange, Telefonica Moviles, T-Mobile and Vodafone founded the "Mobile Payments Services Association (MPSA)", later renamed to "Simpay". The aim of this alliance was the development and operation of a common mobile payment system on a pan-European scale. On June 13th 2005, the German newspaper Frankfurter Allgemeine reported the exit of T-Mobile from Simpay. On June 24th 2005, Simpay announced the discontinuation of their activities (see http://www.simpay.com). What are the consequences for the future of m-payment, especially in Europe? Dr Key Pousttchi, head of the Mobile Commerce Group at the Chair of Business Informatics and Systems Engineering, University of Augsburg, appraises this development as a chance for the origination of efficient and effective mobile payment solutions on a national level. "According to our research, national but all-embracing and user-friendly solutions have better prospects for a market breakthrough of payment with cell phones than the Simpay strategy had" he said in a first comment to the UniPressedienst. The research group is planning to set up an "International Competence Center on Mobile Payment and Banking" with major industry partners at the University of Augsburg towards the end of the year. The complete interview:
WAS THE TERMINATION OF SIMPAY A SURPRISE?
KEY POUSTTCHI: There was already evidence for any length of time that some of the mobile network operators were not quite happy about the progress and about some other things. As well, the change of the CEO in February was an interesting signal. But we did not expect a development like this, meaning the exit of T-Mobile and thus the failure of the alliance.
WHICH WERE THE REASONS OF THIS FAILURE FROM YOUR POINT OF VIEW?
KEY POUSTTCHI: We have not seen any external facts that changed fundamentally and gave reason to a revaluation. Thus the reasons for the failure have to be searched inside Simpay. And if you are looking at the original objective, to set up an interoperable mobile payment system by the beginning of 2004, it seems that the complexity of this task was underestimated.
Although we would have appreciated a success of Simpay - which would have resulted in a pan-European de-facto standard for certain areas - we must state a basic error in the approach: mobile network operators were very much self-absorbed. Payment roaming, the pan-European operator-comprehensive use (and thus billing) of mobile services on which Simpay finally focused (and failed) is not really an issue to the users in most countries by now. There is a simple reason: Except for ring tones and logos, paid mobile services are hardly used in B2C up to now. In this regard we face inhibitors which are very different from payment roaming. And in the scenarios where customers already would want to pay with their mobile phone, a vertical alliance like Simpay cannot bring a solution in most European markets. For these purposes we need banks in the boat.
DOES THAT MEAN THE END OF MOBILE PAYMENT?
KEY POUSTTCHI: The very opposite is true. The failure of Simpay relieves efficient and, above all, effective national mobile payment solutions in Europe from the burden of monolithic structures. At first: Payment is local business. The needs and particularities of the national markets have to be considered. This does not exclude interoperability between the national solutions but that is only a second step. At second: In Germany for instance, about half of the population would be willing to pay with their mobiles phones in one scenario or the other - what an impressive number! Eventually we should begin now to develop solutions customers can do anything with. Maybe the actual development even leads to the effect that scientific results are not longer put aside with the rationale "We know our market better."
My working group keenly analyzed the German market over several years and we presented the Mobile Payment Reference Model (MPRM) this year in February.
WHAT EXACTLY IS THE MPRM?
KEY POUSTTCHI: The MPRM is a reference model that comes from a market-based view which relies on market analysis and empirical data from in-depth user surveys. It pursues a value-based view which is based on abstraction and theoretical analysis. And this model results in a system-based view providing the distinction of three mobile payment standard types, an MPRM organizational model and derives a MPRM application system model on a high level. The outcome is a detailed and well-funded recommendation for a collaboration of mobile network operators and banks in order to realize a national mobile payment system that mostly relies on existing standards and payment procedures, adapting them to the mobile world. Again: People do definitely want to use their mobile phone for payments and if there are really good solutions, they will make it their preferred future payment tool.
WHICH ARE THE FURTHER STEPS OF YOUR RESEARCH GROUP IN THIS AREA?
We do want mobile payment to progress in Germany and Europe. As a university we are of course willing to support the market participants with our research results.
We have very clear understanding on the prospects and restrictions of the MPRM. My group is talking to the German mobile network operators and banks in the course of our "National Roundtable M-Payment" and we also see some interest on the MPRM from other European mobile network operators and banks. We are very eager to discuss with them whether the MPRM is applicable to their national market conditions or which adjustments would be necessary.
Furthermore we are planning to set up an "International Competence Center on Mobile Payment and Banking" with major industry partners at the University of Augsburg towards the end of 2005, in order to commonly work on the important issues in the field of mobile financial services.
WITH SIMPAY, DID MOBILE NETWORK OPERATORS SPEND SCADS OF MONEY FOR NOTHING?
KEY POUSTTCHI: I don't think so. I would guess that the amount of money already spent for Simpay is overestimated on the market. And secondly, I assume that at the execution level a couple of useful standards were developed that provide a common basis and can be re-utilized in the coming solutions, without the necessity of taking over all the complexity that made Simpay fail. Both facts may ease our life very much in the coming projects.
Dr. Key Pousttchi, firstname.lastname@example.org, Phone +49-(0)177-6319508
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