NEEDHAM, Mass. - While online peer-to-peer payments and their mobile counterparts are not new to the payments arena, the use of mobile devices to exchange payments between consumers is still in its infancy, according to TowerGroup. In fact, TowerGroup says the deal between Verizon Wireless and Obopay is novel, given that a major U.S. mobile operator has chosen to partner with a startup-technology vendor to support peer-to-peer payments by means of a downloadable application on mobile phones.
TowerGroup finds that although the relationship between the two companies is helping to move mobile payments in the right direction, that type of arrangement will not become widely adopted because of the lack of interoperability.
Text messaging experienced a similar stumbling block when first implemented. It was constrained by the lack of interoperability for almost 10 years, in much the same way that mobile peer-to-peer payment solutions are now. Only when mobile operators provided inter-network transparency did growth of the texting market explode.
TowerGroup chief analyst Bob Egan, Jennifer Roth, a senior analyst in TowerGroup's global payments practice, and Charul Vyas, who covers emerging technologies, have co-authored "Mobile Peer-to-Peer Payments: Verizon Wireless and Obopay Take a Short Step Down a Long Road," which highlights how the deal is expected to impact the growth of mobile payments.
General observations from the report:
- Verizon Wireless and Obopay both gain some advantage from the new service, but the partnership is more of a clear win for Obopay - given the breadth of Verizon Wireless as a distribution hub for the application and the validation the deal gives to the Obopay business case.
- Citibank is currently in pilot trials with Obopay to provide peer-to-peer payments. TowerGroup says banks like Citi could create a bundled service enhancement for their customers that features mobile peer-to-peer payments. In such a scenario, a bank could waive fees for the service for customers who maintain minimum deposit balances or qualify for other tiered financial offerings.
- To drive widespread adoption, mobile-payment solutions must transcend current differences in message formats, standards and technologies of operators, financial institutions and vendors for funding and payment transfers. The fees consumers pay for peer-to-peer mobile payments must also be close to nothing.
