Mobile wallets and the mobile wallet payment ecosystem
Today, mobile wallets are in the early stages of development. No one in the payment ecosystem knows exactly how the mobile wallet marketplace will evolve in the coming years. With mobile devices having achieved near full market penetration and increasingly rich functionality they are an ideal channel for Single Euro Payments Area () payment instruments.
Similar to the physical world, a mobile wallet typically contains, for example, identification information on the wallet holder, payment instruments-related data accessible to the wallet holder, other non-payment applications such as ticketing and loyalty, and personal information items belonging to the holder (e.g. pictures, documents, etc.).
The myriad contents of a wallet show how, with the addition of other mobile services (such as ticketing, loyalty, couponing, etc), a mobile wallet could boost customer convenience and, consequently, trigger increased use of mobile payment (m-payment) services accessed via the device.
The European Payments Council (), working together with all stakeholders active in the m-payments ecosystem, is willing to contribute to the development of a reliable and secure ecosystem for the initiation and receipt of payments by the mobile phone. The intention is to help establish an ecosystem, which could enable all payers and payees to make and receive m-payments across , and create a secure environment for the multiple stakeholders active in the field.
publishes updated mobile wallet payments white paper
Creating ease, convenience and trust for end-customers (both consumers and merchants) is regarded as critical for the further development of m-payments. Since a mobile wallet may be considered a key tool to address these challenges, the has decided to devote a white paper to this concept in relation to payments.
This document outlines, among other things, how trust in and availability of a wide range of easy to use services offered with mobile wallets may be seen as a facilitator for m-payments.
This white paper endeavours to:
- Inform stakeholders about the ’s commitment to m-payments in and the potential of the mobile channel to build on payment instruments1.
- Inform on the new convenient, homogenous and seamless services access and new business opportunities enabled by the usage of a mobile wallet to perform m-payment transactions.
- Provide examples of the usage of a mobile wallet for m-payments.
- Outline the mobile wallet ecosystem and the different existing models for mobile wallets.
The white paper has been written in a non-technical style to inform payment service providers, their customers and all the stakeholders involved in the payments value chain about the 's views on the usage of mobile wallets as an enabler for m-payments in .
The encourages an open dialogue and a collaboration of all relevant stakeholders to contribute to the success of m-payment services through mobile wallets in . Considering that adoption of the mobile wallet is likely to trigger increased use of m-payments, in July 2013 the issued a first draft of the white paper on mobile wallet payments to seek comments from all interested parties.
The received feedback from 18 different stakeholders in the mobile wallet ecosystem including vendors, mobile network operators, mobile wallet and other service providers, and standardisation and industry organisations. Subsequent to careful analysis of the contributions received, the has now published a final version of the white paper.
The document first describes a number of use cases of mobile wallets for financial services as an introduction to the subject. Next it explains how mobile wallets may be regarded as a facilitator for m-payments while the mobile wallet ecosystem is analysed. This white paper further describes various mobile wallet models enabling m-payments which may be identified in the market today. It also contains a high level overview of some technical and life cycle management aspects and provides a list of the main industry and standardisation bodies involved.
Initial feedback from stakeholders has ensured that the following are also included:
- An updated description of the use cases through the daily life of a mobile wallet holder.
- An updated description of the different stakeholders in the mobile wallet ecosystem and in the overview of the different mobile wallet models.
- More emphasis on the security aspects of mobile wallet infrastructures with their components and the secure environment to host the mobile payment application and / or data.
- An annex providing a short description of the payment instruments.
Key challenges remain to be addressed in future work
Standardisation in the payments domain is a very complex and long-lasting matter. Managing the definition of standards from a security perspective, while adapting as quickly as technologies driving the payments market evolve, are not easy tasks.
To enable a cost-effective approach for all stakeholders involved in the mobile wallet payments ecosystem, a number of key challenges remain to be addressed in the future regarding this topic:
- Harmonisation of user interfaces to enable a consistent user experience (easy to use, intuitive, etc).
- Co-existence of payment with other mobile services in a mobile wallet.
- Co-existence of multiple mobile wallets on or accessed through a single mobile device.
- Linkage of mobile wallets in the payer's space with merchant wallets.
- Interoperability of mobile wallet interfaces.
- Execution of proximity payments with remote mobile wallets.
- Alignment of mobile wallet security aspects (including authentication) with existing and forthcoming requirements for m-payments2 related to mobile wallet interfaces and infrastructure.
- Coordination amongst various industry initiatives on mobile wallets.
In the meantime, the newly published white paper is intended to be a useful resource for any stakeholders engaged in the debate around mobile wallets and their role in the payments landscape.
Dag-Inge Flatraaker is the Chair of the M-Channel Working Group.
Related articles in previous issues:
1 Note that the concepts described in the white paper may also be applied to non areas.
2 See, for example, the “Recommendations for the security of internet payments” and the draft “Recommendations for the security of mobile payments” published by the European Central Bank. These recommendations were developed by the European Forum on the Security of Retail Payments (SecuRe Pay). The Forum was established in 2011 as a voluntary cooperative initiative between relevant authorities from the European Economic Area – supervisors of payment service providers and overseers in particular – formed with the objective of facilitating common knowledge and understanding of issues related to the security of electronic retail payment services and instruments and, where necessary, issuing recommendations.
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