Deutsche Telekom May Buy, Partner in Payments Business
Deutsche Telecom AG may buy or partner with a payment processor as it looks to expand into near-field communication transactions using mobile phones.
NFC transactions, which are increasingly supported on high- end smartphones, will eventually allow users to pay for retail goods or services such as transit rides by waving their device across a reader. The NFC market may account for a third of the $1.13 trillion in global mobile-payment transactions projected for 2014, according to IE Market Research Corp.
Deutsche Telekom, Europe’s largest phone company, may “have financial relationships and perhaps own a financial entity” as demand for the transactions and associated services grows, Chief Technology Officer Ed Kozel said in an interview in Barcelona today.
“Just as easily, we could have a deep and dramatic partnership with a financial institution” to help handle the requirements of large-scale mobile payments, he added.
An explosion of interest in NFC payments is occurring in part because ”everyone” is expecting Apple Inc. “to get into the market, and they know the price of being late” after seeing the success of devices such as the iPad, Kozel said.
NFC payments may help network operators to increase their role in the digital economy as they have information about customers and have shown they can use it in a trustworthy way, according to Patrik Karrberg, a researcher in the London School of Economics’ Department of Management.
Opportunities
“If you look at the legislation on a lot of privacy issues, it’s very national, and the operators are very attuned to working with that kind of national legislation,” he said earlier this month. “It’s an opportunity.”
In November, Verizon Wireless, AT&T Inc. and T-Mobile USA Inc. formed a venture called ISIS to offer an NFC-based service in 2012. Visa Inc. is testing contactless payments and planning to roll them out commercially in mid-2011.
France Telecom SA, that country’s largest phone company, said in December that it will work on a new version of SIM cards with capacity for contactless payments. Mountain View, California-based Google Inc. is also introducing the technology in the newest version of its Android operating system.
To contact the reporter on this story: Matthew Campbell in Barcelona via mcampbell39@bloomberg.net;
To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net
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