Peter Crocker

Mobile payments: forecasts, technologies and opportunities

Table of Contents

  1. Summary
  2. Introduction
  3. What are mobile payments?
  4. NFC
    1. QR codes and 2D bar codes
    2. Mobile POS systems
    3. Mobile web payments
    4. SMS transactions
  5. Mobile-payments vendor profiles
    1. MasterCard Worldwide
    2. Isis
    3. Nokia
    4. Google
    5. Amazon
    6. Zong
    7. MFoundry
  6. Forecasts
  7. Industry outlook
    1. Credit card companies get disenfranchised
      1. Battle for secure element to control NFC
      2. Opportunities for merchants to leverage mobile
      3. Mobile payments creates huge revenue source for mobile ecosystem
      4. Control of the customer will be key
  8. Key takeaways
  9. Further Reading

1. Summary

Mobile payments — payments initiated by a phone for a transaction at a physical point of sale or online — will total over $750 billion worldwide by 2015. Categories include near-field communication (NFC) technology, 2D bar code systems, mobile point-ofsale systems, SMS payments and mobile web application payments.

The value of global mobile payment transactions is expected to grow from $31.8 billion in 2011 to $753 billion by 2015, equating to a CAGR of 88 percent, as illustrated below in Figure 1. Today mobile payments are relatively small compared with the $680 billion in e-commerce transactions that JP Morgan forecasts for 2011. With a growth rate of 88 percent, mobile payments will quickly rival e-commerce transactions, which are growing at 19.4 percent.

[dataset id=”182861″]

Much of this growth will be driven by the emergence of NFC technology and contactless payments. The existing NFC-enabled POS infrastructure in developed regions such as the U.S., Europe and Japan, and growth drivers such as Google Wallet, are key to the adoption of mobile contactless payments.

We believe multiple players will compete and cooperate in the market to help drive adoption. As market penetration slows, competition will intensify and players with the greatest customer relationships will write the rules. Google’s launch of Google Wallet has put the company in a very strong position to build relationships both on the merchant and consumer sides of the transaction. Internet companies such as Google and wireless carriers will look to move up the value chain as the market evolves and slowly encroaches on the value provided by credit card companies and other intermediaries.

The opportunity to process mobile payments via SMS is limited to virtual goods; high costs will keep vendors in this space from moving into the much larger physical goods market. Quick response (QR) and 2D bar codes for processing mobile payments are also technologies that will have limited utility as NFC technology provides more security and usability.