Telcos face barriers to offering mobile payments

Telcos will have to negotiate consumer trust issues and commercial realities if they decide to make a play in the mobile payments space, according to the chief of Bendigo Bank's telecommunications subsidiary.

Community Telco Australia's David Joss told CeBIT's Future of Payments conference in Sydney last week the existence of a role for telcos in the future payments space shouldn't be dismissed out-of-hand.

"The telcos, if you think about it, are prepaid and postpaid businesses built on very large transaction engines," Joss said.

"If the regulatory environment was right, technically it wouldn't be hard for a telco to actually enter some sort of mobile financial service capability."

However, he saw several potential barriers to telcos making an effective play in the space.

"There's a bunch of barriers that may actually stop them," he said.

"One's certainly regulatory, one is that the biggest corporate customers for telcos are actually the bank's themselves, and [the telcos] may not be looking to go into competition with [the banks] anytime soon. That's ... a commercial reality."

Winning consumer trust to the point where they entrusted money with telcos could also be a challenge, according to Joss.

"One thing we do know from the consumers we talk to is they actually trust their banks a lot more than what they trust their telcos, and when we go out to do focus groups and talk to consumers I can guarantee they'd rather have their money in a financial institution than in a telecommunications company in Australia," he said.

"I think it says something about the way telcos have done customer service over many years now."

Community Telco is several months into closed trials of a self-built "mobile payments ecosystem" in Charlton and Heathcote in regional Victoria.

The Redy system had produced "encouraging" feedback and given the firm "confidence to look forward about how we actually participate in the broader ... mobile payments space", according to Joss.

Joss positioned Community Telco as a path to innovation for its parent Bendigo Bank in the mobile payment space.

"We've got a very innovative culture and the bank's now starting to tap into that," he said.

"We're assisting the bank to innovate by working on initiatives with them, for them, and through them effectively."