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M-payments were supposed to revolutionise the m-commerce market, offering consumers the chance to purchase low-cost goods and services with their mobile phone.
However, in a major setback for m-commerce, Paybox, the largest m-payments provider in Europe, last week announced its immediate withdrawal from the UK market. The company cited the slow development of the market and the industry's lack of co-operation, particularly among banks and telecom operators, as the major factors behind the decision.
Alex Kwiatkowski, senior consultant at analyst firm Ovum, said there is simply not enough demand from consumers or businesses for m-payments and other m-commerce applications at the moment.
"Most companies' plans for m-commerce are some way down the line as there is no pressing need to do anything now," he said. "This is reflected in the changing business model of the [m-commerce] suppliers such as Paybox, which are looking around trying to find a niche or companies to partner with."
Banks and telcos need to co-operate more on m-payments projects if m-commerce is to have any chance to flourish, Kwiatkowski said.
M-payments still have the potential to be a viable business application in the long term, although the Paybox decision will slow its progress.
"If the model can be tweaked it can work because the premise - people using mobiles to pay for small purchases - remains viable," he said. "However, the Paybox move means m-payments are unlikely to be mainstream till around 2005."