Asia rings in mobile payment numbers

Region has world's largest number of mobile payment users, which is set to increase 50 percent to reach 62.8 million by end 2010, finds new report.

The Asia-Pacific region is leading the way in mobile payment adoption, with the number of users in this market segment set to grow by 50 percent from 41.8 million last year to 62.8 million by end-2010, according to a new report.

Released Monday by research firm Gartner, the report predicted that the worldwide number of mobile payment users will surpass 108.6 million this year, growing 54.5 percent from 70.2 million users in 2009.

Sandy Shen, research director at Gartner, said in the report that emerging markets will continue to see strong demand for mobile payments, driven by the "unbanked" and "underbanked" populations that do not have ready access to banking infrastructure or personal computers. This environment makes mobile a natural choice as the access platform for payments.

"At the same time, regulators in early-adopter markets are tightening up policies to provide better user protection and fight against unlawful financial activities relating to money transfer," Shen explained.

Service providers in emerging markets have also identified the right combination to drive demand for mobile payments by targeting the functions that users want and building the ecosystem to sustain such services, she added.

However, mobile payment continues to lag in developed markets where there are already plentiful choices of payment for consumers, she said.

To target these markets, Shen recommended service providers build mobile payment on top of existing payment infrastructures and patterns, allowing consumers to choose the channel--retail, phone, online or mobile--that suits a particular transaction.

While there have been several developments in mobile payments, short message service (SMS) is still the dominant mobile payment technology--for consumers in both emerging and developed markets--due to its ubiquity and ease-of-use.

Mobile payment services using Wireless Application Protocol (WAP) is more frequently used by consumers in developed markets where there is a higher penetration of data-enabled phones and active data plans.

Despite the overall growth, Gartner noted that mobile payments users remain a niche community, accounting for just 2.6 percent of the Asia-Pacific's overall mobile users. Worldwide, users of mobile payment services make up 2.1 percent of total mobile users.

According to the research firm, many financial institutions fail to identify the business case of NFC (near field communications) as it has similar functionality as contactless cards but includes the complexity of mobile carriers and ecosystem partners.

A previous ZDNet Asia report noted that mobile payment adoption had been slowed down by various issues including the underdeveloped mobile payment ecosystem and lack of NFC-enabled handsets. A Frost & Sullivan analyst said then that "strong marketing initiatives" from device makers as well as the participation of banks are needed to help spur adoption of devices in mobile payment.

Last week, the Singapore government announced plans to further drive mobile transactions, by investing in a mobile services ecosystem.