IDC cites successful mobile payment schemes

MANILA, Philippines - The most successful mobile payment schemes are those in which the operator controls both the banking and the telecommunications assets, a report released by research firm International Data Corp. (IDC) revealed.

IDC Financial Insights said this has been achieved either by a company in one field acquiring a company in the other or via a joint venture.

According to the report, mobile payments are still an embryonic technology, with dozens of alternative methods in use. IDC said it believes that there is no one best model toward which all mobile payment systems will converge, rather different models will be favored depending on the concentration of telecommunications and financial assets in each country.

“The topic of mobile payments is a controversial one, with dozens of competing technologies, strategies, and business models. In our view, too many analyses have focused on the technology, rather than the organizational structure. In this report, we examine five case studies of successful mobile payments systems from around the world to identify best practices and their dependency on social, political, technological, and economic factors,” IDC Financial Insights practice director Aaron McPherson said.

The study also revealed that several economic and cultural factors determine which organizational model is best for a specific country. Thus, there is no one “best” model worldwide, and variations are to be expected from country to country.

It pointed out that no one technology will dominate the mobile payments field. Instead, multiple technologies will coexist, serving different user groups and device types.

Each case study was chosen to typify different basic organizational structures. For multibank, the study looked at MasterCard MoneySend while for bank–mobile operator partnership, it chose Jibun Bank. The study also chose Zoompass for multi–mobile operator, SK Telecom for single mobile operator, and PayPal Mobile for third-party proprietary.

Meanwhile, another IDC study noted how the Asia-Pacific regions’ most dynamic banks are utilizing risk-mitigating technologies to plug leakages and manage their risk exposures more proactively.

“The finding suggests that while capital remains of paramount importance, banks are establishing a balance between driving business strategies and enhancing risk controls. Risk management technology spending remains vital, with progressive institutions making intelligent investments to capitalize on market opportunities, leapfrog hesitant competitors, and put themselves in good stead during the upturn,” IDC Financial Insights said.

The forum, which brought together chief risk officers (CROs) and their deputies from 11 countries across Asia-Pacific (excluding Japan), also unveiled the key areas that senior risk practitioners from both emerging and developed Asia are currently focused on. They include managing consumer credit risk and how analytics plays a crucial role in this, identity theft and management (predominantly around card fraud), internal fraud management, embedding a risk culture within the bank, compliance documentation and reporting, and the adoption of international best practices in credit risk.

For instance, the delegates pointed out that although merchants in the Asia-Pacific region are becoming Payment Card Industry Data Security Standard (PCI DSS) compliant and banks are issuing EMV chip cards in a bid to prevent and mitigate identity thefts, the problem remains prevalent for payment cards. Conversations around employee fraud point to the need to establish internal controls coupled with the development of a risk and enforcement culture that stresses accountability and responsibility and reinforces the banks’ tough stance against enterprise fraud.