Mobile payments in Spain: The "war" will continue under the promise of low margins in the area of payments acceptance

A few weeks ago, the reputable payments magazine THE PAYPERS  asked me to briefly express my opinion about this trending topic. My experience and work under WayVent has allowed me to gain additional insights about the "mobile payments war" in Spain, and therefore I have "pasted" the full article below. As usual, it is hard to synthesize all my thoughts and opinions in one post, but for sure the debate is open and can lead to a bigger debate which I am always keen to start...


The biggest honeycomb is in all the data, identity, and fraud related services...

With a 110% mobile penetration and nearly 60% of smartphone users, Spain has all the numbers to make mobile payments a reality very soon. A recent study from Forrester Research showed that despite the high mobile penetration in the country, only 13% of users use their mobiles to make purchases, although the number is growing and some big retailers already have a bigger share. Additionally, other reports highlight that 23% of SMEs are planning to implement mobile payments in the coming months.

Furthermore, we also see the big push of NFC technology in the country, and since its pioneer trial in Sitges back in 2010, the total rollout of contactless POS is currently over 300,000, where Comercia Global Payments (Caixa) owns more than a third of these. Other players such as Orange Cash, Vodafone Wallet, and Caixa Wallet in partnership with the top three Spanish telcos have also entered this market.

One particular thing made telcos more active in payments than most banks in the past few years is GSMA’s push and lobbying efforts. In fact, I am sure we will hear once more in the following dedicated events that the year of mobile payments is coming; however, many things must change for this scenario to become a reality. Telcos are losing ARPU (Average revenue per user) in messaging services and potentially some of their user base over the traditional voice services due the proliferation and consolidation of OTT services such as WhatsApp. Therefore, it will be interesting to see what telcos will bring to the table to overcome the compelling HCE technology with its secure element in the cloud. This technology and the newly launched hybrid NFC approach from Apple Pay seem to have threatened the dominance of the SIM-based NFC model. Interestingly, Visa and MasterCard have leveraged on this new cloud initiative and have backed it up with the next revolution in the payments and risk industry: the Token Service, infuriating perhaps many telcos which will have to push even harder for a piece of the payments pie from a different angle.

Risk Management views at Authentication level. Time for the banks to move on?...

Last February I had the honour to speak at the Merchant Payments Ecosystem Conference held in Berlin, where I briefly shared my views about a key topic that is emerging again in payments and risk management, which is Authentication and Identity Management.

With the rise of mobile commerce, new initiatives are emerging to close the gap between the always complex process of authenticating and validating customer regristation or login in a CNP environment (cardholder non-present). It seems that Biometrics is finally taking off after many years of speculation about its real potential, and some vendors are taking advantage of this momentum. Some of them are simply launching optical and facial recognition KYC processes with a great UX flow that enable merchants to capture customer personal details and documents with a quick "hold and scan in front of the cam" way. However, we must differentiate between valid biometric data and old fashion OCR technology.