Telecom Lead Europe: MasterCard has signed its agreement
with Deutsche Telekom to enable mobile consumers to use their mobile phones as
a secure way to pay.

The European partnership aims to make mobile payments a
reality for Deutsche Telekom’s 93 million mobile customers across Europe.

This is a huge step on our way to increase mobile
payments. With MasterCard we have a well-known and experienced partner generating
growth in this important market segment. We want to build a comprehensive
ecosystem around mobile payment, helping Telekom to realize its strategy of
being the first choice for customers regarding connected life and work,” said
Thomas Kiessling, chief product and innovation officer for Deutsche Telekom.

The mobile operator will roll out mobile payment service
in Poland later this year.

German consumers will also benefit from mobile payments,
initially in a trial with mobile phone tags and cards.

Deutsche Telekom will issue the MasterCard products via
its subsidiary company ClickandBuy, the owner of an e-money licence. Products
will also be launched in other European markets.

The mobile wallet service is open to other issuing banks
and partners, helping support our customers in adapting to new consumer
behaviors and changing market dynamics. Through today’s announcement we are
showcasing a real meeting of the minds and that’s where true partnerships come
from,” said Ann Cairns, president, International Markets for MasterCard
Worldwide.

Deutsche Telekom has over 129 million mobile customers,
almost 34 million fixed-network lines and 17 million broadband lines (as of
march 31, 2012).

The Group generated revenues of EUR 58.7 billion in
the 2011 financial year – more than half of it outside Germany (as of December
31, 2011).

 

The drive behind Deutsche Telekom’s (DT) mobile
payments strategy is to create a comprehensive framework that
will address many of the challenges in what is currently
an incomplete ecosystem. This is a commendable goal. DT is working to
ready the market and strengthen its brand association with financial services
by becoming a credit card issuer for MasterCard. DT is looking to improve
the retail infrastructure for mobile payments by acting as a sales partner for
NFC enabled Point of Sale (POS) terminals. It is providing NFC tags for
consumers that do not have NFC enabled devices. DT is also taking a considered,
phased approach to service roll out, which is no bad thing, starting in Poland
this year and Germany in 2013. 

 

But DT’s strategy is very broad and may be
challenging to execute well in so many different areas and across the different
geographies that DT operates in.  DT is also facing increased competition
from a growing number of players with similar mobile payment propositions,
including Google that, like DT, aims to differentiate with an integrated online
and mobile payments service.  We also see challenges with DT’s
business model, which is based on a share of transactions and rental fees – we
expect this to be tested by alternative models based on advertising with free
services to consumers and merchants,” said Angel Dobardziev and Eden Zoller,
analysts at Ovum.

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