Mobile Payment Services - Towards a Framework for Analysis
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The payment services industry has seen great changes the last decades, with mobilephones emerging as a new means for performing payments. Originating fromsimple services provided to the unbanked in undeveloped markets, advanced serviceshave emerged inmost parts of the world. Banks, telecom operators and otherthird party companies are rapidly launching new and innovative payment serviceto capitalize on a growing trend. Mobile payment services now reach over 100 millionactive users worldwide, and is expected to become even more widespread inthe coming years. As mobile payment services are new in most markets, theoretical knowledgeon the subject remains relatively limited. Conducting research to heightenthe understanding on the manner is therefore considered important to bothresearchers and practitioners. This master thesis addresses mobile payment services through three consecutiveparts. The first part proposes a theoretical framework for the analysis of mobilepayment services, based on a literature review and practitioners feedback. Thesecond part applies the proposed framework to existing Telenor mobile paymentservices and assesses its general applicability. Following the assessment, minoradjustments to the framework are made. In the last and final part of the thesis,the framework is used for screening potential mobile payment service designs forBulgaria, suggesting it is an attractive market for Telenor. A Proposed Framework for AnalysisA literature review and multiple iterations with practitioners resulted in aframework consisting of two parts. The first part represents the context, orenvironment, surrounding a mobile payment service, and is based on the wellestablished contingency theory. In this theory, the market context is groupedinto four contingency environments, namely the (1) social/cultural, (2) commerce,(3) technological, and (4) legal, regulatory and standardization environments, and isfurther decomposed into 12 factors. The second part of the framework is a conceptualization of mobile paymentservices through a set of three service design dimensions, encompassed by the fourcontingency theory environments. The three service design dimensions are (1)end user functionality, (2) technology, and (3) interoperability. End user functionalityrefers to what payment functionalities the service offers its customers. Technologyrefers to the communication technology used to connect the sender and receiver ofpayments. Finally, interoperability refers to how mobile payment services interactwith other parts of the financial ecosystem. Within each service design dimensionthe practitioners can choose from several options. The contingency theory factors will guide the practitioner to what options areviable in a given market context. The framework s appropriate application istherefore to aid in the screening of potential service designs. Testing and Revising the FrameworkThe proposed framework is tested on existing Telenor mobile payment services, inorder to assess its general applicability to these services. This is performed througha series of practitioner interviews and a study of the Serbian mobile paymentservice environment. The findings enable a comparison between practitioners approach to designing mobile payment services and that of the framework. Thecomparison reveals several interesting insights. First, the 12 contingency theoryfactors provide a solid foundation for understanding the environments impact onmobile payment services design, as they corresponded well with the factors thepractitioners report as influential. Second, only two of the service design dimensions are considered highly relevantby practitioners, namely end user functionality and interoperability. With regardsto the technology dimension, practitioners suggest an alteration in its scope isnecessary for it to be equated with the other dimensions. Additionally, severalother potential relevant dimensions are also suggested by practitioners. As such,we conclude that end user functionality and interoperability form a basis for allservice designs, and that other dimensions can be added to the set at practitioners discretion. The framework is revised to reflect these insights. Assessing the Bulgarian MarketBased on the revised framework, an assessment of the Bulgarian mobile paymentservices market is conducted. The assessment shows that all examined enduser functionalities are viable options in Bulgaria. Further, the existing financialinfrastructure allows for satisfying interoperability. We therefore conclude that theBulgarian market for mobile payment services represents an interesting businessopportunity for Telenor. Due to limitations of the study, the framework can only be considered a first steptowards a fully verified analysis framework. On this basis, several opportunitiesfor further research are identified.