Mobile payment uptake 'optimistic' in Asia

Summary:Ovum sees potential for up to 1.5 billion users in emerging markets worldwide by 2015, but operators need to work on the mobile wallet's interoperability with other services.

Emerging markets in Asia will lead the way in mobile payments (m-payments) over the next several years but lack of interoperability with other services could hinder its growth potential, according to a new report from Ovum.

By 2015, the research firm expects the m-payment population in emerging markets worldwide to reach between 925 million and 1.54 billion, depending on the regulatory landscape and the effectiveness of service providers' plans to promote the technology. Emerging markets, Ovum added, refer to China, India, Southeast Asia excluding Singapore, Africa, Eastern Europe, Middle East, and South and Central America.

The report went on to pinpoint the m-payment adoption outlook in Asia's developing markets as "optimistic", based on the fact that the number of mobile connections per 100 users outweighs that of banking accounts, it noted.

Angel Dobardziev, principal analyst at Ovum, singled out the Philippines and Thailand as having some of the most successful m-payment services. Thailand's TrueMove, for example, has 6 million mobile wallet subscribers and focuses on airtime transfers rather than the typical money transfers.

Filipino operators Smart and Globe, on the other hand, have around 3 million and 1.2 million users for their respective Smart Money and Gcash offerings. However, both services have had stagnant growth over the last few years, despite strong mobile subscriber growth and a low banking penetration, she noted.

Interoperability critical for development
The key to realizing m-payment's growth potential in emerging markets, Dobardziev pointed out, is making the mobile wallet service interoperable with other services.

"Currently most mobile money initiatives offer little or no interoperability with other services," she said. "Ovum expects that addressing this issue will become the critical factor in the development of mobile money services."

According to the analyst, operators recognize that interoperability will make or break m-payment in the medium and long term but view differentiation and exclusivity as key influencers in the short term.

However, it would be in the interests of the operators to start planning their interoperability strategies as soon as possible or risk suffocating the development of the m-payment market, she argued. This is because interoperability will dramatically increase the number of mobile banking transactions, as transaction volume in any network is proportional to and driven by the number of interconnections possible between subscribers--a theory known as "Metcalfe's Law".

A separate forecast released by Gartner in June 2010 also painted Asia-Pacific as the leader in m-payment adoption. The research firm had predicted the number of users in the region would hit nearly 63 million by end-2010, accounting for about two-thirds of the global total of 108.6 million.

Topics: Software, Apps, Mobility, Networking

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