Blog: Domestic Mobile Payment Schemes: Progress or Protectionism?
The creation of domestic mobile payment schemes by retail banks is good news for their customers domestically, but potentially threatens mobile payments at an international level.
The major Swiss retail banks, alongside SIX Payment Services and Swisscom, have announced the development of a new mobile payments service. This makes Switzerland the latest country to build a national electronic payments scheme based on mobile payments, following Turkey, Poland, the U.K. and others.
These domestic payment schemes keep banks and national payment bodies at the forefront of mobile payments within their respective markets. Additionally, they prevent banks from needing to sacrifice revenue to third parties, such as Apple, to offer mobile payments to their customers. With all the major issuing banks in a given domestic market supporting one mobile payments scheme, that scheme gains the potential to dominate mobile payments in that market.
|“If domestic mobile payments schemes become dominant, consumers will benefit within their home markets but will be unable to use their mobiles to pay in other countries.”|
These developments protect issuing banks from disruption by international mobile payment services, such as Apple Pay, but they also threaten the concept of an internationally usable mobile payments service. If domestic mobile payments schemes become dominant, consumers will benefit within their home markets but will be unable to use their mobiles to pay in other countries. If the different domestic payment schemes also utilize different technologies at the point of sale or develop incompatible back-end processes, this problem is exacerbated.
These issues could be overcome in the long term by international partnerships, but in the short to medium term, international electronic payments will remain dominated by cards.
Samuel Murrant has been part of Datamonitor Financial, a research company focusing on financial services, since 2012 and works as an analyst in the consumer payments team. His areas of expertise include online payments, loyalty and prepaid cards. He is also a regular contributor to Datamonitor Financial’s blog, where this article first appeared. Sam may be reached at [email protected].
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