Rogers Wireless applies to become bank
Canadian operator goes a step further than most cellcos in seeking pole position in mobile payments market
Published: 8 September, 2011
READ MORE: Canada | Rogers Wireless | Billing
Rogers, one of the first quad play carriers and the first to provide LTE services in Canada, has often been the innovator of its market. Its most recent attempt to change the rules is an application to become a bank and so enhance its role in the mobile money value chain.
This is a key objective for many cellcos, which regard their hold over the customer's bill and SIM card - both vital to mobile payments - as one of their few weapons left against the internet giants. Rogers is going a step further, and has filed to become a bank under Canada's Federal Bank Act, with the aim of offering mobile services and a "niche credit card opportunity" for consumers.
Rogers does not plan to build full service bank locations but to emulate retailers which offer their own credit cards. After all, like other operators, it has an extensive footprint of outlets, a well known brand, and has a long term billing relationship with users. Mobile analyst Chetan Sharma told GigaOM that Rogers would integrate its banking service into a digital wallet and would "see if they can extract more value by keeping a portion of these transactions. Another impact would be to reduce churn, keep consumers a few months longer and increase the lifetime value of users."
Other operators, similarly, are looking to take more than a passive supporting role in m-payments, whether these are online, or enabled by NFC handsets swiped in physical stores. In the US, Verizon, AT&T and T-Mobile have formed the Isis joint venture, though it pulled back from plans to create an alternative payments network and agreed to work with the existing giants such as Visa. In the UK, Telefonica O2 has made a similar move to that of Rogers, filing with the UK Financial Services Authority in February to become a payment service provider. This would allow it to offer prepaid accounts for peer-to-peer or NFC payments. In Asia, NTT DoCoMo of Japan has a banking arm.
The great asset in such strategies is the increasing reliance that customers place on charging items to their monthly cellular bill, which greatly boosts the efficiency and simplicity of buying in app stores, for instance. According to mobile checkout specialist Open Market, the ease of entering a phone number at the point of purchase is five times more likely to result in a purchase than credit card billing. Telefonica recently released a new billing API, to support carrier billing for app developers, via BlueVia, its global program to release new APIs and boost software support for its networks and stores. "Mobile operator billing offers a way to charge for goods and services using financial relationships that in some markets are more prevalent than credit cards," said José Valles, head of BlueVia. The carrier is working with two partners in this area, Boku and PaymentOne.
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