The lack of consensus between telcos and banks is the main sticking point in implementing mobile payment models in Central and Eastern Europe (CEE), according to new analysis from Frost & Sullivan.

Disagreement has slowed the expansion of the mobile payments market in the region, but both financial institutions and telecoms companies expect mobile payments to generate additional revenues, according to Frost & Sullivans Analysis of the Mobile Payments Markets in Central and Eastern Europe report. 

The report, which covers SMS premium services and NFC (as well as other payments) found that the value of mobile payment transactions in CEE reached almost €290m (£258m) in 2010 and predicts that this will rise to €22.7bn by the end of 2017. 

“Mobile phones in CEE are gradually becoming information and education centres, with the number of applications on them constantly expanding,” says Frost & Sullivan industry analyst Edyta Kosowska. “Starting to use mobile phones as a wallet is only a matter of time.”

Frost & Sullivans report says that mobile network operators and banks are the key players required to drive the market forward. In the CEE countries, these stakeholders are increasingly interested in the mobile payments market as a good niche to fill. However, limited cooperation between mobile operators and financial institutions has resulted in lower growth rates for the mobile payments market.

“Both stakeholders have equally strong purchasing power, thus creating business models that satisfy all is difficult and time-consuming,” says Kosowska. “The main issue of the dispute is the revenue split: both parties would prefer to receive a percentage of each transaction as opposed to a fixed fee.” Low margins on in-store payments has also made progress difficult. 

The report says that Hungary is the most advanced market in the CEE region for mobile payments – in-store transactions, parking, motorways, movie tickets are all covered by mobile payments in the country. The leader in terms of NFC is Bulgaria, where service providers see the potential in the unbanked part of the society. NFC trials are also conducted in the Czech Republic, Hungary and Poland, according to Frost & Sullivan.