The value chain in the new mobile payment environment
A complex scenario in which technology and service providers from a variety of sectors converge
In the new ecosystem of mobile payment methods, the agents that originate from the natural environment (banks, payment method networks, businesses) join those that will define their importance in the near future (such as wireless telecommunications providers, dot-com companies, and cell phone manufacturers). A complex scenario in which technology and service providers from a variety of sectors converge.
Manuel Borrajo, author of the report titled Medios de pago e identificación personal en la era digital (Payment Methods and Personal Identification in the Digital Age), analyzes how services are distributed and the economic flow for each agent in the ecosystem:
Mobile app developers
They provide the application for users.
In general, applications are free to users and the cost is covered by the commercial entity, the bank, the Internet company, or the wireless telecommunications provider.
Mobile terminal manufacturers
They provide the terminal (hardware and basic software).
The mobile terminal is directly paid for by the user or the cost is shared with the wireless telecommunications provider through a minimum-term contract or monthly payments.
Wireless telecommunications providers
They provide the network services and usually the cell phones as well.
The data communications needed for the transactions are paid for by the service users to the wireless telecommunications provider.
They allow the exchange of payment information between businesses, issuing banks, and buyers.
Banks pay the corresponding payment systems for each transaction that is carried out.
They issue payment cards and manage the credit (issue) and payment bank accounts involved in the transactions (purchases).
Banks may charge users a fee to issue cards, a monthly interest for credit cards, and a fee to refill cards that use this format. They also receive a commission from businesses, and the fee is based on the purchase amount.
Fixed network telecommunications providers
They provide the communications networks to banks and payment systems, and also to businesses with access to a fixed network.
Banks and networks pay telecommunications providers to access and manage the data network in accordance with the capacity and services requested.
POS terminal manufacturers
They provide the devices and the basic software to businesses.
The cost for these terminals may be paid for by the business’s bank as part of the service provided, or by the business itself.
Point of Sale software developers
They provide the software for managing the sales of businesses.
Large businesses pay software companies for the applications they need. Smaller businesses sometimes use services that are completely cloud-based.
They offer customers the products or services being demanded.
Users pay for the products or services via their cell phones.
Trusted service managers (TSM)
They manage end user registrations, credentials, and access passwords. They can also manage customer service for loading applications on mobile terminals.
They charge for registering and updating applications and passwords.
Internet dot-com companies
They provide users with the applications for mobile devices and they can provide payment services to users as well as businesses, with traditional or proprietary payment methods.
In general, applications are provided to users for free. Proprietary payment services are subject to fees for payment method registration as well as for each transaction or credit refill that is carried out.