Global mobile payment revenues to surpass USD171.5 billion this year

 

Mobile spending expected to increase 61.9% year on year

Global mobile payment revenues will top USD171.5 billion this year, according to a new forecast from Gartner, as consumers increasingly use smartphones and NFC-enabled devices to pay for goods and services. The research house estimates spending will increase 61.9% year on year from USD105.9 billion in 2011, driven by purchases via mobile storefronts or using mobile payment technology in-store. Gartner expects the number of consumers using the technology worldwide to increase from 160.5 million last year to 212.2 million by the end of 2012, boosted by the penetration of mobile devices and the glut of payments services available on the market.

Merchants will lead the consumer migration towards mobile payments in Europe and the US over the next few years, according to Gartner. This will combine both e-commerce purchases and mobile payments in store, with big name early-adopters such as Starbucks leading others. The coffee shop chain says that it processed USD26 million in mobile payments via its Mobile Pay app for devices running on iOS and Google’s Android operating system last year alone. PayPal is also making major inroads into the space as it attempts to replicate its success in online payments to mobile, recently partnering with 15 major retailers including Abercrombie & Fitch and Toys ‘R’ Us to roll out its mobile payment terminals in-store.

Gartner predicts that as the mobile payment market expands, it will fragment into a raft of different services and solutions as payment firms tailor their products to local demands. SMS payments will continue to dominate in developing markets, as the penetration of internet-connected devices remains low compared to key markets such as the UK, where more than half the population now own smartphones. In the US, however, the firm forecasts that 88% of all transactions will take place online by 2016. Despite the hype surrounding NFC technology, Gartner forecasts that it is still a few years away from becoming mainstream, with the number of handsets supporting the technology still relatively low and Apple yet to launch an NFC-enabled iPhone.
“NFC payment involves a change in user behaviour and requires collaboration among stakeholders that includes banks, mobile carriers, card networks and merchants,” says Shen. “It takes time for both to happen.”

Rising global demand suggests that even as major payment services such as MasterCard’s PayPass and Visa’s V.me compete with each other for user loyalty, there is still space for dedicated firms such as Square or iZettle to grow. “There will be a few global players that have the scale and resources to serve large customers and the mass market whose requirements can be readily satisfied by standard solutions,” says Gartner analyst Sandy Shen. “However there will always be segments that cannot be sufficiently served by the global players.”