Evan Schuman's StorefrontBacktalk

Nick Holland has spent the last decade covering the intersection of the mobile and payments industries. He currently covers all things mobile-transaction related at Yankee Group.

A recent product announcement in France may have effectively torpedoed today’s mobile payment business model. As a result, it may require some hefty strategic rethinking by retail IT execs who, until now, have assumed that they would own the relationship with the customer.

The Inside Secure OpenNFC standard can allow third parties to access NFC capabilities on phones, effectively bypassing mobile-operator-led initiatives such as Isis. Is it too late for the Isis consortium to change direction and work in conjunction with existing card networks such as Visa and MasterCard?

In any change as potentially disruptive as mobile payment, the industry’s first reaction is always going to be a jockeying of players It’s never been more the case than with mobile payment, as the number of players involved—carriers, banks, card brands, retailers, payment processors and handset manufacturers, among quite a few others—is staggering.

The mobile operators are particularly frustrated, having to figure out ways to somehow get a cut of revenue from all of the profitable services being pushed through their pipes, including voice, video, music, gaming and app stores. The mobile operators have, in every case, attempted to control subscriber access to these services and been bypassed by third parties, relegating them to that term operators hate the most—”dumb pipe.”

Now there is an opportunity these carriers can, theoretically, control: mobile payments.

(Related story: The CIOs of Pizza Hut and Ann Taylor—plus the SVP/IT at Home Depot—discuss the advantages and dangers of turning part of their revenue flow to mobile payments.)

And retailers will likely find themselves squeezed in the middle. Banks and card networks are unlikely to provide phones to customers, so the gatekeeper to accessing consumers will be the mobile operators, right? Let’s say that history has an unpleasant habit of repetition.

It is pretty much a given that NFC will be the enabling technology for the interface at the point of sale. But the ownership of the virtual wallet—or, as it is known in the trade, the Secure Element—is still up for grabs. Perceived wisdom is that the SIM card will be the Secure Element and, consequently, the operator providing this SIM controls the access to, storage of and payments made by virtual payment cards. This assumption has been prevalent in recent operator-driven NFC mobile payment initiatives.

In France, for instance, the mobile operator business case for NFC is known as “SIM rental,” where issuing banks, mass transit agencies and retailers pay the mobile operator for rental of secure memory within the SIM card for storage of virtual cards. The roles of banks, mobile operators, retailers and others remain largely untouched—banks are not competing for mobile operator business; mobile operators are not competing for bank business. The status quo is largely maintained.

In the U.S., a more combative approach is playing out, with the Isis joint venture (Verizon Wireless, AT&T and T-Mobile) aiming to go head to head with the major card networks.