Mobile money transfers and contactless NFC will make up half the overall mobile-payments market globally in five years' time, according to a new report.
NFC (near-field communications) is a short-range wireless technology, similar to RFID and Bluetooth, which powers mobile-wallet technology.
The Mobile Payments Markets: Strategies & Forecasts 2008-2013 report from analyst house Juniper Research predicts that in the next few years, mobile payments will be driven by mobile money transfers and NFC-enabled handsets used to buy goods. The market is currently dominated by purchases of digital goods such as ringtones, music and games.
Report author Howard Wilcox said mobile payments offer "significant" service opportunities for migrant workers and people without bank accounts to make remittances, adding that existing services are growing rapidly. Mobile wallets will enable people to use their phones to pay for small-value items such as drinks and magazines, he added.
According to Juniper, money transfers and NFC will fatten the overall mobile payments market by a factor of 10 between now and 2013.
The analyst predicts the top three regions for mobile payments will be the Far East & China, Western Europe and North America — which together will account for more than 70 percent of mobile money payments on a gross transaction basis by 2013.
However, there are several hurdles to be addressed if the market is to reach tipping point, Juniper said, including NFC handset availability, workable business models and financial legislation.
Earlier this year the analyst predicted the mobile-payments market will reach tipping point over the next three to five years.