Matthew Karnitschnig reports on how too many divergent interests may be slowing the progress of mobile e-commerce.
M-commerce is generally divided into two categories — micropayments, or those under $10, and macropayments, more-expensive purchases that are usually made by credit card or check. There’s a general consensus that telecom operators are best placed to handle micropayments by charging for the services on monthly statements. Wireless operators already do this for things like special ringer tones and logos — symbols such as hearts or cartoon characters that one can download and send to friends. Indeed, this area alone is now worth about $1.7 billion world-wide. Operators have turned the market into a lucrative niche by charging surchages of as much as 30% for the services.
But the real battle centers on control of higher-margin, macropurchases. After some resistance, mobile operators have come to accept that they lack the risk-management expertise financial institutions have in dealing with consumer credit on a large scale. There are also a host of regulatory issues that would prevent wireless firms from running payment services in many countries. Still, mobile operators are reluctant to cede the territory to credit-card companies and banks without getting a piece of the action themselves. The problem is, the low fees charged by the current array of payment options leave little room for any new payment system to recover its costs. Credit-card commissions, which generally are about 3%, already leave the likes of Visa and MasterCard with razor-thin margins. And bank commissions on debit-card transactions tend to be even lower.