Sunday, June 06, 2004

Stimulating mobile payments...?

Planet Internet informs us that our Ministry of Economic Affairs is setting up a group that wants to stimulate a common standard/payment procedure for payment via the web and mobile phones. What is intruiging is the referral to Chipper/Chipknip in the accompanying press release.

It is only too often that people say that the e-purse schemes Chipper and Chipknip were not a success given that the technology was incompatible. However, this is incorrect. From the outset, both schemes aimed for and allowed for interoperability, given that any business calculation shows this is the best way forward (see also the dissertation of Leibbrandt). And as soon as the specifications were available, terminals were built that allowed both schemes.

What happened in the market however is that the competiton between Chipper and Chipknip became very tough, including big advertisements, deals with merchants to only accept the one scheme and not the other etcetera. But fact of the matter is that in 1997 a common chipknip/chipper terminal was available and in use on counters in retailers shops.

Given the competition between Chipper and Chipknip and the uncertainty as to their future market position, many retailers refused to choose the one or the other. This buyers boycot lead Chipper (second in the market) to re-evaluate their market position and their possibilities to become bigger than Chipknip. The conclusion was that it would be best to eliminate Chipper and migrate to Chipknip.

So the Chipknip/Chipper history is not one of incompatible technical standards, but one of strong competition in the banking market, followed by consolidation towards a more efficient setting. Now isn't it interesting that most people don't want the Chipper/Chipknip history to be repeated while on the other hand banks are urged to be more competitive?