On 9 September, Dutch banks ABN Amro, ING and Rabobank, and mobile phone operators T-Mobile, KPN and Vodafone signed a letter of intent to create a single, harmonised mobile payments system in the Netherlands. ‘It is technically and commercially feasible to introduce m-payments in the Netherlands. In 2012, it will be possible to pay at the check out [of shops] with your phone’, the consortium said in a statement.
“It is the first time that major banks and phone operators in a European country have all joined forces with regard to mobile payments”, said a Spokeswoman for ING Bank.
Quinten Kroes, Counsel at Allen & Overy, said: “With all three network operators and major retail banks on board, the new consortium has all the players needed to make m-payments really take off on the Dutch market”. Bart van Reeken, Partner at De Brauw Blackstone Westbroek, added: “This puts the telecom providers on top of customer data. It facilitates targeted marketing, may transform operators into advertising partners and raises interesting data protection issues”.
Dag-Inge Flatraaker, of the European Payments Council, believes it is key to ensure cross-industry cooperation in the mobile payments area: “This initiative will contribute to an evolution towards a Single Euro Payments Area for mobile payments. The Dutch initiative must be seen as an important step in this direction”.
Many experts, however, believe success is not guaranteed. “I am sceptical about any announcement such as this”, said Trevor La Fleche, Senior Research Analyst at IDC Financial Insights. “Payment mechanisms in Europe need to be more or less universal. It would be a disaster for every country in Europe to develop its own mobile payments scheme.”
Security is another concern. “It will be interesting to see whether [the consortium] will be able to convince consumers and retailers of the security of the new system”, said Peter Eijsvoogel, Partner at Allen & Overy. “The conditions of the security risks involved will play an important role.”
But Andrew Newsham, Spokesman for Rabobank, insists that consumers have nothing to worry about: “The payment software itself is located in a secure part of the SIM-card. No payment information is sent over the mobile network”.
Michiel Willems 2010. Copyrights apply. Published previously in E-Finance & Payments Law & Policy magazine.