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Upside Opportunities in the Mobile Payments Market

The mobile payments market has long been an attractive opportunity, and mobile service providers have been facilitating payments for content services for many years. Mobile payment services such as ticketing and contactless payments have been available in some markets since the late 1990s or early 2000s.

More advanced m-payments services -- typically targeting customers in the developed world -- such as m-wallet and associated value-added services, can generate significant revenue for mobile network operators in the long-run.

However, it is important to acknowledge that not all mobile operators can launch these services successfully and make them mass market, according to the latest market study by Pyramid Research.

Their new report highlights the differences between the banked and unbanked, and provides a broader context for mobile operators in general.

Pyramid Research took a closer look at mobile payments, such as the traditional card payment process, the benefits of mobile payments to different elements of the value chain, the positioning of Visa, Google and PayPal, and a description of contactless payments and NFC technology.

"Mobile payments and financial services in developed markets are best suited to operators with large subscriber bases, deep financial pockets and the managerial capabilities and stability to remain focused on long-term development," said Stela Bokun, senior analysts at Pyramid Research.

Even investment in distribution channels will be needed, despite existing networks of retail stores. As a case in point, Bokun provides the example of the Russian operator MTS.

MTS, which has thus far attracted 1.4 million MTS Bank cards, sells financial services through its retail network, which consists of 4,462 branches.

Despite such a large distribution network, the mobile network operator still needs to invest significant funds into enabling all the retail outlets to sell mobile financial services – staff has to be trained and stores need to be suitably equipped before the operator engages in active promotion of the service.

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