Commentary: Mediation's role in the mobile payments future

Oct. 30, 2012

Two trends increasingly dominate the enterprise software conversation today. The first is big data, which is now almost impossible to avoid. The topic of big data adorns magazine covers and airport advertising billboards as often as smartphone ads. On some levels, it’s a meaningless label, since it simply refers to a quantity. The useful and interesting thing about big data comes from what enterprises do with it. In any case, big data is here to stay. Simultaneously, we have witnessed the rise of mobile payments. Without doubt, these payments (encompassing mobile money, mobile money transfers, mobile wallet, and mobile payment apps) are on the increase.  The progression of technology and the way we pay for things is changing. 

The evidence is widespread. Apple has introduced its Passbook app, a precursor to the mobile wallet, with couponing, rewards and other capabilities available through the iPhone. Currently, there are 14 vendors -- including Starbucks, Walgreens, Target, United Airlines and Fandango --participating in Apple's Passport program.

In a further significant development and in one of the largest mobile payment roll-outs, electronic payment service Square announced a deal with Starbucks that will put Square's small mobile-payment devices in 7,000 of the coffee maker’s storefronts in the U.S. Customers can purchase coffee with Square's Wallet app, and Starbucks also revealed it will enable digital tipping on its mobile payment apps and on Square Wallet in the U.S. in the summer of 2013.

Both consumers and businesses stand to win from the increasing prevalence of mobile payments. The market is only going in one direction: up. And this will continue to be the case for the foreseeable future.

Mediation adds value for service providers

Network operators need to react to both of these trends. The challenge for them is how to change the dumb pipe into a smart pipe. It’s all about adding value, and that’s where mediation comes in. Service providers need to re-think how their data is collected and used. Systems that communicate and transfer simple bits may no longer be up to the job, but ones that can capture relevant data and can aggregate and manipulate it will triumph. It is becoming more complex to monetize services, but getting the right data at the right time in the right form is absolutely the key first step.

Service providers need an infrastructure that integrates all relevant sources of customer, usage, behavior and network data into a 360-degree view of the customer. Applying advanced analytics to this data delivers the ability, for example, to make personalized offers tailored for each subscriber. At a time when value-added options are everything and  the customer is king, this means mediation can provide a significant platform for success.

Mediation might not be sexy, but it is vital to anyone who aspires to benefit from the mobile payments opportunity. And traditional mediation — converting certain data types to other data types from familiar sources for billing purposes — will be just the start of the mobile payments challenge. Mobile payment will involve more than simply processing larger and newer sources of data; it must also address the challenge service providers face as they try to manage complex services that their business and operational support system (BSS/OSS) infrastructures weren’t necessarily designed to accommodate. As a relatively new concept, mobile payment services need to be integrated into the revenue management, business intelligence, and service assurance architectures with, ideally, minimal turnaround times. As mediation will be the base platform, it will play a critical role in ultimate success.

Rapid time to market is going to be vital, particularly given the speed with which the mobile payments market is emerging. Any new service needs state-of-the-art mediation to seamlessly bridge components residing in any layers of an IT and network architecture. Mediation platforms will also provide comprehensive functionality to ensure that any supporting systems can communicate as effectively as possible. The same platforms also establish the bedrock for effective policy and charging control, a key requirement for customer service providers (CSPs) looking to profitably manage the explosive growth in mobile payments while creating profitable services segmentation offerings and the best possible user experiences. An ability to deliver this in environments characterized by high data volumes and low latency requirements for mission-critical applications is key.

For mobile payment offerings to thrive, mediation is critical. It is the most strategic way to manage next-generation network and service assets.

Magnus Hyttsten is the chief technology officer of DigitalRoute. He has more than 19 years of experience designing and implementing mediation systems worldwide. After working for several years with its predecessor products, he cofounded DigitalRoute in 2000 to provide next-generation mediation technology to the communications market.

Topics: Carriers / Operators , Software , Technology Providers , Transaction Processing , Trends / Statistics

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