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Deutsche Telekom unveils mobile payments plans

“We want to build a comprehensive ecosystem around mobile payment, helping Telekom to realise its strategy of being the first choice for customers regarding connected life and work,” says the T-Mobile operator as it signs a partnership deal with MasterCard and outlines four “strategic pillars” for its move into financial services.

Deutsche Telekom and MasterCard

DEAL: Ann Cairns, MasterCard’s president of international markets and Deutsche Telekom chief product and innovation officer Dr Thomas Kiessling

Deutsche Telekom has signed a mobile payments partnership deal with MasterCard and revealed that it is to take a four part approach to the introduction of payments services in Europe — online payments, mobile wallets, issuing payments cards and distributing POS terminals.

“We want to build a comprehensive ecosystem around mobile payment, helping Telekom to realise its strategy of being the first choice for customers regarding connected life and work,” says Thomas Kiessling, Deutsche Telekom’s chief product and innovation officer.

“Deutsche Telekom is establishing an ecosystem for mobile payments which provides an end-to-end service for private customers and retailers,” the carrier explains. “The strengths that Deutsche Telekom brings to the payment sector are its existing relationships with more than 90 million mobile customers in Europe; a familiar, reliable brand; local presence in the markets; and high security standards. In addition, with its ClickandBuy subsidiary, Deutsche Telekom already has an established player in the payment market.”

Deutsche Telekom’s planned European payment ecosystem is based on four strategic pillars, the carrier adds:

Online Payment

Thanks to Deutsche Telekom’s ClickandBuy subsidiary, this is an established area with 14 million customers and many high-profile partners.

Mobile Wallet

In the future, the smartphone will become a mobile wallet. In addition to actual payments, it will also enable applications like ticketing, couponing or unlocking cars or houses. Deutsche Telekom is not only offering its customers the option of keeping their debit and credit cards safe in their wallet, but also their customer loyalty cards, admission tickets, or travel tickets. In line with its group strategy, Deutsche Telekom is also a secure enabler for partner company applications. The mobile wallet will launch this year in Poland, and in the first half of 2013 in Germany. Launches in additional countries are also planned.

In the medium to long term, Deutsche Telekom will also integrate additional options into the mobile wallet, for example, an option for receiving mobile coupons on your mobile phone directly and redeeming them in-store, and an option for transferring money directly between mobile end devices.

Issuing payment cards

To complete its portfolio, Deutsche Telekom will issue its own payment product through its ClickandBuy subsidiary. ClickandBuy’s e-money license allows Deutsche Telekom to issue payment cards itself (i.e. without a partner bank in the background). It will enter into a strategic partnership with MasterCard for this purpose.

POS/Terminals

Deutsche Telekom will also enter the key area of distributing NFC-capable terminals to retail outlets. This will solve the “chicken-and-egg” problem of contactless and mobile payments. The company will act as a partner for the sale of POS terminals and develop a sustainable infrastructure. Initial success has already been achieved through a collaboration with Apcoa, Europe’s largest parking space management company.

“With this strategy, Deutsche Telekom is taking steps to ensure it is on track to profit from the continuing evolution of the payment market over the coming years,” it adds. “The company addresses both parties in the payment cycle: For all of its customers’ needs, Deutsche Telekom offers secure, easy-to-use solutions — online, mobile or at the POS. Deutsche Telekom simultaneously offers retailers payment and marketing solutions from a single source that can be implemented across all sales channels.”

The initial consumer rollout in Poland will take place later this year and consumers in Germany will also be introduced to mobile payments during 2012, initially via a trial involving mobile phone tags and cards. This will then be followed in 2013 with a mobile wallet service which will also be open to other issuing banks and partners. “Products will also be launched in other European markets.”

Partnership discussions could even extend as far as Google, Kiessling has told Bloomberg:

“We’re talking to other players in the market, and even a cooperation with Google is theoretically possible,” Kiessling, whose title is chief product and innovation officer, said in Berlin yesterday. “We’re in talks there as well,” he said, declining to specify potential areas of cooperation.

A video has also been produced in which Rene Obermann, CEO of Deutsche Telekom, and Ajay Banga, CEO of MasterCard, discuss their new European partnership:

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