Mobile payments to ring up $11bn by 2011

Analyst predicts 52 million consumers paying for goods via mobile technology

Ian Williams, vnunet.com 01 Nov 2007

Around 52 million consumers will adopt new mobile technologies such as Near Field Communication (NFC) and other physical mobile payment methods to pay for everyday goods and services by 2011, analysts predict.

A recent study from Juniper Research suggests that mobile payments will hit $11.5bn by 2011.

This research follows a similar report in July which foresees mobile payments generating $22bn by 2011, driven primarily by SMS-based person-to-person fund transfers and payments.

Juniper reckons that NFC and other physical mobile payments methods will begin to offer consumers a viable alternative to cash, credit and debit cards.

Alan Goode, a senior analyst at Juniper, told vnunet.com that the major drivers of physical mobile payments will be convenience and enhanced functionality.

"Convenience in terms of you never leave home without your mobile phone, and enhanced functionality in terms of the value-added services it can bring," he said.

"For instance, I can check my credit card balance via the phone before paying for goods at a physical point of sale, and use a mobile barcode coupon to redeem a special offer at the same time."

Juniper predicted that around 12 per cent of mobile phones will offer support for some form of contactless payment by 2011, most probably NFC.

This equates to nearly 470 million NFC-enabled handsets worldwide, which should provide a significant marketplace for retailers to offer goods via mobile payment applications.

The study found that varying mobile payment applications and services are already available in most regions in a variety of formats where they are being adopted in either trial or commercial modes with favourable user feedback.

Although there are some security concerns regarding these forms of payment, Goode explained that banks will not allow physical payment on a phone if the security does not meet certain standards.

He added that mobile phone theft is an issue, but that with the correct procedures in place by the mobile operators and the payment scheme providers the concern should be "no more than losing a plastic payment card".

Industry players including retailers, handset vendors and the financial community in the Far East and the US are seen as particularly receptive to the idea of using RFID or NFC to facilitate mobile payments for physical goods and services.

"The evidence is that people generally spend more when using a physical mobile phone payment method. Data from Japan sees an increase in the retail basket size in comparison to other payment methods such as card and cash," said Goode.

The report concluded that all members of the mobile payments value chain must develop a mutually satisfactory and robust business model to guarantee revenue to all parties.

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