Over the last few years we have witnessed a development of the ICT like it was never before experienced… and it will continue in the following years: currently, there are more than 5.000 million of mobile phone users around the world and it is estimated that these numbers will continue to rise, reaching 6.000 users by 2020. In addition, the importance of mobile phones worldly is also obvious due to the fact that by 2015 the mobile phone coverage will have go beyond the one that electrical network provide in different areas of Middle East, Sub-Saharian Africa and Southeast Asia.
This development is, to a great extent, due to the increase of services that mobile phones offer. In the late 90s mobile phone users could only make phone calls. Just some years later, mobile phones also allow people to send texts, images and audios; record videos and audios; take photos like an ordinary photo camera; surf the internet; and listen to music or play video games among many other services. However, there are more services to come: just a few years ago, the ICT and banking sectors realized that mobile phones also have the potential to transform the way people carry money and pay for things. In this context, Telefónica believes that, in the next years, the mobile phone will become a gateway for a range of services ranging from credit & debit cards, money transfers, loyalty cards and that ultimately, backed by the existence of technologies like near field communication (NFC), the mobile phone will replace the physical wallet as a payment instrument.
Telefónica aims to be a world leader in the provision of digital financial services through the mobile wallet. For this reason, we are working with a wide range of financial partners to grow the overall m-commerce ecosystem and developing technological innovations that offer a new experience of mobile payment services for customers as well as for merchants. It is important to provide customers with the best deals and lowest prices, as well as automatic topping-up or seasonal ticket renewal. As for the merchants, not only providing them new payment services, but also services of value added in the retail sector which allow, for example, savings on transportation operational costs .
In May 2013 CaixaBank, Santander and Telefónica signed an agreement to create a joint venture to develop new business opportunities based on the latest mobile and communication technologies. This joint venture has recently obtained the regulatory approval from the European Commission, becoming the first alliance in Europe between financial institutions and telecom operators to innovate jointly in the creation of new digital services. In addition, Telefónica’s I+D Financial Services area is contributing with knowledge in architectures and technologies to support Telefonica’s launching of financial services based on mobile communication devices, especially on maximum safety items which , like the SIM card, enable the operators to provide these services according to the quality levels required by consumers.
Telefónica has already launched to the market mobile financial services such as Zuum and Wanda. Zuum is a pre-paid account accessed via mobile phones alongside a MasterCard card, which let consumers transfer cash to other people, make in-store purchases, top-up their phones and carry out other financial transactions. It is the result of a joint venture between Telefónica and MasterCard launched in May 2013. The product primarily focuses on the payment requirements of Telefónica Vivo customers who do not have bank accounts, offering them financial inclusion. However, users who already have current accounts can also sign up for the service. Cash can be transferred onto pre-paid accounts at mobile phone refill stations, supermarkets and newspaper stands. Telefónica and Master Card also offer mobile financial services in other 12 Latin American countries through their Wanda mobile wallet.
We can highlight some other financial services launched by Telefónica, such as:
- Direct to bill: Telefónica has signed global agreements with Facebook, Google, Microsoft and RIM to offer a simple and convenient way for customers to purchase goods, particularly virtual goods, via their mobile phone. Whether they are buying an app, mobile game or making an in-app purchase, direct to bill enables the customer to simply charge the payment to their phone bill or prepaid credit, avoiding the need to use a credit card. Research from MACH found that over a third of European smartphone users have paid for applications via operator billing.*
- Partnership between Monitise plc and Telefónica to develop and manage new and existing mobile payment and commerce services for its customers. The initial focus of the partnership will be in the UK.
- Global Framework Agreement between Bango and Telefónica to create an enhanced direct-to-bill payment experience for mobile app stores. The partnership combines Bango’s frictionless payment experience with Telefónica’s BlueVia Payment APIs, connecting over 314 million chargeable customers worldwide to the Bango Payments Platform.
* Source: Research commissioned by MACH and carried out by Opinium in April 2000 involving 2000consumers in UK and Germany