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The task of this background paper is to show that m-payments are likely to become an important section of the retail payment sector and to identify future policy issues related to the development of mobile payments. Both the current market penetration of mobile phones and the expected growth of m-commerce make it highly likely that m-payments will grow considerably within the next few years. While there are many actors that might provide m-payment services, banks and telcos are the most obvious candidates. Telco entry into the payment market would increase competition and could foster more efficient cross-border payment solutions. Telcos already have some experience in providing payment services to third parties. A move into large-scale payment provision, however, would provide considerable challenges in risk-management. Another possibility is that customers will simply use the mobile phone as another access device to bank accounts. This would leave banks in charge provided they do in fact offer mobile solutions. A third option is co-operation between telcos and banks. Whichever option prevails, an effective functioning of m-payments will require co-operation and interoperability. This raises a number of competition policy issues in particular with respect to pricing. Finally, their increased payment activities may force telcos to become banks or EMI. However, they may also offer payment instruments that do not fall under banking or EMI regulation. In this case, there would be strong competition between differently regulated industries.

Background Paper No. 2
Electronic Payment Systems Observatory. y.

Additional information

Authors: KRUEGER M, JRC Institute for Prospective Technological Studies, Seville (ES)
Bibliographic Reference: EUR 19934 EN (2001), pp. 29. Euro: Free of charge
Availability: Available from European Commission, JRC Knowledge Management Unit, Ispra (IT) Tel: +39 033278 9843 or +39 033278 9864 Fax: +39 033278 9623 E-mail:
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