Sunday, February 22, 2009

Who will own interoperable switches?

I received a very interesting e-mail from a friend of this blogspot, recently. He made the point that we are seeing many mobile payment solutions now being deployed successfully in the same countries. Some of the initiatives are owned by mobile operators, others banks and sometimes independent third parties. It stands to reason that these entities would ultimately evolve to support interoperable payments between each other.

The question that he posed is that if we are going to see these interoperable (switches) entities, who will own them? We could probably identify a few different scenarios:
  • Individual banks and/or mobile operators
  • Consortia of players
  • Existing interoperable payment switches
I am of the opinion that it will not be any of these - at least not initially. As a matter of fact, I believe that trying to identify the "owner" of interoperable switches is old world thinking and a red herring. The key now is to switch-on end user connections. After that, we will see peer to peer connections (one mobile wallet operator connecting to another mobile wallet operator). Only after this has been done and we have visible traction regarding peer-to-peer interoperable transactions, will it be viable to start thinking about an industry switche.

All the talk about a money remittance HUB (and all the investment that is being made) is absolutely premature.

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