Many of the world’s mobile operators are exploring, testing or launching services that support digital commerce, such as mobile payments, retail loyalty and couponing, and transport ticketing. While many of these services are still in their formative stages, there have been large steps towards deployment as there are currently 300 launches using NFC technology globally, 51+ commercial services, and 170 SIM-based NFC pilots and trials by mobile operators. Even with these developments, the mobile commerce market remains highly fragmented and competitive, and it’s not clear which technologies or players will emerge as leaders.

Opportunities for mobile operators in digital commerce

There are currently three areas where mobile operators can add value to digital commerce:

• Enabling payments, both online and at point-of-sale;
• Digitising loyalty and couponing for retail and entertainment; and
• Hospitality and enabling ticketing for transportation and events, among others.

In each case mobile operators can:

• Provide the secure connectivity that enables the service to be delivered to the consumer at the right time;
• Authenticate (identify) the consumer; and
• Provide a range of value-added services, such as data analysis and targeted marketing, to merchants and brands.

In many sectors, mobile operators can fundamentally change the economics of service provision, opening up new commercial opportunities for companies in adjacent industries.

From a consumer’s perspective, the ideal digital commerce service will support payments, loyalty, couponing and ticketing. A holistic digital commerce proposition would enable a consumer to use their mobile handset or another connected device across the entire customer journey, supporting planning and product research, shopping online, booking travel, finding entertainment, organising vouchers and loyalty cards, and shopping in stores. The ultimate goal should be to provide an end-to-end service that provides the consumer with highly relevant information, recommendations and offers at the right time and place.

Key enablers

Regardless of which digital commerce opportunities it pursues initially, a mobile operator is likely to need to bring to market two key enablers:

• A mobile wallet – an application that helps consumers manage offers, payment cards, stored value accounts, vouchers, loyalty programmes, tickets and receipts from multiple service providers.

• The secure element – a ring-fenced secure area that prevents sensitive personal data and valuable collateral, such as payment cards, stored value or tickets, being hacked by malware or unauthorised apps.

The SIM is an important asset that mobile operators can harness to strengthen their proposition. They need to ensure that SIM-based authentication isn’t significantly more expensive or complex than other mechanisms, such as Host Card Emulation (HCE), alternative hardware based secure elements, tokenisation or cloud-based solutions.

Some factors to consider

Here is a summary of some useful key steps and enabling factors you may want to consider when evaluating how to launch your digital commerce services:

• Consumers want a holistic solution: From a consumer’s perspective, the ideal digital commerce service will support payments, loyalty, couponing and ticketing. The ultimate goal should be to provide an end-to-end service that provides the consumer with highly relevant information, recommendations and offers at the right time and place.
• Collaborate to achieve economies of scale: Rather than attempting large numbers of bilateral negotiations and processes, mobile operators, banks, transport operators and major retailers should collaborate to reduce complexity for consumers, brands, merchants and other service providers.
• A consistent consumer experience: Merchants, brands, transport operators, banks, event organisers and other service providers should collaborate to use the same processes and data flows to ensure a consistent consumer experience. This approach will generate economies of scale and reduce complexity across the value chain. Consumers will only use services that are straightforward, intuitive and give them a sense of control.
• Build in flexibility: Digital commerce services need to be flexible enough to accommodate different service providers’ strategies, regional variations and local market conditions.
• Provide technical enablers: As the integration of service providers into mobile wallets will be a competitive differentiator, mobile operators need to offer merchants, transport operators, banks and event organisers easy-to-use and standardised integration processes and standardised technical specifications.
• Minimise the risks for service providers: There are many different potential charging models, ranging from a one-off fee to regular rental fees to transaction-based fees. A success or transaction-based charging model, which is widely used for internet advertising, is likely to be popular with service providers, as it limits their risk – they only have to pay when their customers are actually making use of the digital commerce service.

In summary, mobile operators need to collaborate with each other and the wider market ecosystem, follow standards and be as agnostic as possible with regard to commercial models and technologies.

If you want more information on best practice in digital commerce please review our eBook with case study examples including a video case study, and links to our key whitepapers and technical papers.

We’re always interested in hearing about new deployments, so please let us know about any new case studies you think may be worth investigating. You can contact us for this or for more information on [email protected]