Mobile payments to reach $617bn in 2016, says Gartner

Gartner is predicting that worldwide mobile payment transactions will grow dramatically from $105.9 billion in 2011 to $171.
Written by Jack Schofield, Contributor

Gartner is predicting that worldwide mobile payment transactions will grow dramatically from $105.9 billion in 2011 to $171.5 billion this year: an increase of 61.9 percent. And it will keep on growing.

Sandy Shen, a research director at Gartner in China, said today (Tuesday) in a statement: "We expect global mobile transaction volume and value to average 42 percent annual growth between 2011 and 2016, and we are forecasting a market worth $617 billion with 448 million users by 2016."

Mobile payments have been widely hyped over the past decade, since Vodafone launched m-pay in 2002. But there's little visible evidence of a boom. A lot of different companies are offering services in various countries, including O2 Wallet and Barclay's Pingit in the UK, Google Wallet. MasterCard's PayPass, Simpay, Isis (a joint venture between AT&T, T-Mobile and Verizon Wireless), VeriFone, Square, and a PayPal service reported here yesterday (PayPal takes phone-based payments to the high street).

Unfortunately, few retailers support even one of these mobile payment services, and there is no single system or device that a customer could rely on using everywhere.

Gartner says: "The mobile payments market will experience fragmented services and solutions for the next two years. Technology providers will have to cater their solutions to the local market that will be using different access technologies, business models and partners, and under different regulatory conditions."

In other words, it's chaos out there.

Gartner believes shopping will drive transactions in North America and Western Europe, including "e-commerce purchases where users buy online, as well as in-store purchases". However, "in developing markets, money transfer and airtime top-ups will account for most transaction volume, and money transfers will account for the largest portion of the transaction value because of the demand for secure and efficient ways of storing and transferring money." This may well be done using SMS text messages.

Indeed, Gartner says: "Africa tops all regions in transaction value throughout the forecast period, benefiting from a higher proportion of money transfer transactions that have higher value per transaction than other use cases."

Travel applications also drive a large volume of mobile transactions, with contactless cards being used for bus, tube and train travel. The payments are relatively small, but there are billions of them. Some cards are also used to pay for parking.

By contrast, the NFC (Near Field Communications) system launched by Nokia, Philips and Sony in 2004 has made little progress outside Japan. A year ago, Google publicly backed NFC when launching its Google Wallet mobile payment service, but only half a dozen US phones are available with the RFID-style NFC chip that the system requires for a tap-to-pay service.

Gartner's Shen says:

"NFC payment involves a change in user behavior and requires collaboration among stakeholders that includes banks, mobile carriers, card networks and merchants. It takes time for both to happen, so we don't expect NFC payments to come into the mass market before 2015. In the meantime, ticketing, rather than retail payment, will drive NFC transactions."

On Gartner's numbers, the two biggest regions for mobile payments are, and will remain, Asia Pacific and Africa, and Gartner expects these to account for 60 percent of mobile payments in 2016. North America will trail Africa, and Western Europe's share will only be half the size of Africa's.

Since there are huge commercial benefits to having a cheap, secure way to exchange small sums of money, perhaps that should prompt the European nations to choose one widely-supported system, as they did with GSM. I don't expect it will.

The full report, Forecast: Mobile Payment, Worldwide, 2009-2016, is available on Gartner's website.


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