Mobile payments on the up

Despite massive growth figures, mobile payment market increasing slower then expected

Tags: E-commerceGartner Incorporation
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Mobile payments on the up Mobile payment users are set to grow 38.2% in 2011 to 141.1 million from 102.1 million users in 2010.
By  Georgina Enzer Published  July 22, 2011

In 2011, mobile payment users will pass 141.1 million, a 38.2% increase from 102.1 million users in 2010, according to Gartner.

Worldwide mobile payment volume is also set to soar 75.9% from $48.9 billion in 2010 to $86.1 billion in 2011.

Gartner has revealed that despite the strong growth predictions, the mobile payment market is growing slower than expected.

"In developing markets, despite favorable conditions for mobile payment, growth is not as strong as was anticipated. Many service providers are yet to adapt their strategies to local requirements, and success models from Kenya and the Philippines are unlikely to be translated to other markets," said Sandy Shen, research director at Gartner.

Developing markets have a high penetration of mobile devices and low banking penetration, leading to favorable conditions for mobile payments; however, this does not guarantee success. Service providers must adapt their strategies to local market requirements to help ensure the success of mobile payments.

"In developed markets, companies are trumpeting the prospects of Near Field Communication (NFC) without realising the complexity of the service model. We believe mass market adoption of NFC payments is at least four years away," Shen said. "The biggest hurdle is the need to change user behaviour by convincing consumers to pay with mobile phones instead of cash and cards."

Gartner has predicted that SMS and Unstructured Supplementary Service Data (USSD) will remain the dominant access technologies in developing markets due to the constraints of mobile phones.

WAP will remain the preferred mobile access and payment technology in developed markets and WAP will account for almost 90% of all mobile transactions in North America and about 70% in Western Europe in 2011.

Money transfers and prepaid top-ups will drive transaction volumes in developing markets such as Eastern Europe, the Middle East and Africa, where these two services will account for 54% and 32% of all transactions in 2011.

"Thanks to the success of mobile application stores, such as Apple's App Store, and the efforts in driving mobile sales by major retailers, such as Amazon and eBay, merchandise purchases far outweigh other use cases in developed markets, which include North America and Western Europe," Shen said. "We predict that in 2011, merchandise purchases will account for 90% and 77% of all transactions in North America and Western Europe, respectively."

2769 days ago
Vinod Mehra

Mobile reflects personalization and convenience. And the two sign will always reflect growth.

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