I have written about the m-commerce value chain in previous blogs – about the fight among operators, banks, service providers, application vendors for the same consumer and retailer.  As a result we have been seeing different structures and business models in various markets while none of the players have been able to reach the kind of scale one would like.

This thought process was further supported by a recent Ovum study which talks of a resurgence in m-commerce transactions i.e. purchase of content, goods or services via transactions initiated on the mobile device and completed over-the-air. Ovum’s contention is that banks need to focus on m-commerce transactions rather than contactless payment technology, which will still be a while stabilising and gaining wider acceptance – otherwise they risk losing their market share and place in the value chain.

I had read this a few days ago but it got further exemplified by the launch of FaceCash by Aaron Greenspan, the purported real brain behind Facebook.

What is FaceCash? A mobile application for smartphones which displays a barcode enabling mobile payments.

The user transfers money to a FaceCash account and also has his/her picture on the account which allows the retailer to identify the account holder at the time of payment.

The retailer can completely avoid the credit card networks Visa/ Mastercard with their 2.5-4% fees. Instead the retailer would need to have a barcode scanner, an internet connection, a computer with a browser and FaceCash with their 1.5% fee. FaceCash provides the POS software for the retailer and a back-end accounting software.

It is an innovative approach.

The challenge is the same chicken and egg. Application users will come if there are enough number of retailers accepting the application payment.  As for retailers, do you focus on the large retailers with multiple outlets and try and integrate vouchers and coupons; or go after the smaller mom-and-pops which means a more diversified sales team – and of course deeper pockets.

Considering they are still in private beta, let’s wait and watch.