Contactless Mobile Payments entering Europe : The contactless mobile payment ecosystem and potential on the European market

Abstract: Abstract Contactless mobile payments are a payment method done with a mobile phone and a contactless technology. Instead of paying with cash, a payment card or a cheque, a user can tap its mobile phone onto a terminal to pay. Across the globe, several markets have been embracing the need for new payment methods. In Asia, contactless mobile payments have been used since 2004. In some of the African countries, due to an insufficient banking industry, mobile payments have been the only electronic payment method. However, in Europe contactless mobile payments are still in their initial phase. The benefits of contactless mobile payments are that they are easier to use, faster and more secure. However, there are some implications. Firstly, the lack of standardisations regarding how the technology will work has led to an undefined ecosystem consisting of many stakeholders with different motives. Secondly, in order for contactless mobile payments to break significant ground the users need to change their existing payment methods and habits. This is a time consuming process, which will require consistency and patience. The research purpose of this thesis has been to define the contactless mobile payment ecosystem with its future potential on the European market. The research paradigm has been of an interpretive nature where the researchers’ interpretations on the information have been in focus. In order to answer the research purpose, an action research has been conducted, including an analysis the of Porter’s Five Forces model applied on the current contactless mobile payment ecosystem with its various stakeholders, the attendance at the annual NFC Congress in Austria as well as an experimental case study on Google. 3The findings of the action research have resulted in new definition of the current contactless mobile payment stakeholder ecosystem. In this new definition of the ecosystem, the user has been defined as the strongest force, hence has been placed in the centre encircled by mobile network operators, banks, merchants and transit authorities. In the ecosystem handset manufactures, operating system providers, technology vendors, cash handling organisations, card networks, POS terminal manufactures and governmental bodies have also been represented. The vision of the case study on Google has been to present a market entry strategy for how Google could enter the European market of contactless mobile payments. The research resulted in a proposition that Google would enter the market in the following order; the UK, France, Turkey, Russia, Germany, Spain and Italy. The conclusions of the research have been that contactless mobile payments will cut across an entire ecosystem, but that the ecosystem at the moment is not fully defined. To achieve a competitive position, a stakeholder has to deliver an outstanding user experience that is interoperable within the whole European market. Key­words: Contactless mobile payments, near field communication (NFC), mobile payment ecosystem, payment ecosystem, Google, Android