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Gartner predicts significant mobile payment growth through 2016

Expect mobile payments to surge over the next few years, said analysts at research firm Gartner Inc. A new report from the company said the value of transactions employing mobile payment methods will top $171.5 billion this year. That's a growth rate of nearly 70 percent over 2011's $105.9 billion Gartner said. Additionally, users of mobile payments will grow from 160.5 million in 2011 to 212.2 million this year.

And Gartner said the advance of mobile payments worldwide will continue to be robust for the foreseeable future.

"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," said Sandy Shen, research director at Gartner.

While Gartner is bullish on mobile payments in general, it said NFC as an enabling technology for mobile payments won't really begin to kick in for several more years.

"NFC payment involves a change in user behavior and requires collaboration among stakeholders that include banks, mobile carriers, card networks and merchants," Shen said. "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," Shen said, "ticketing, rather than retail payment, will drive NFC transactions."

Instead of NFC, Gartner said SMS text messaging will be the dominant access technology in developing markets because of the constraints of mobile devices and the ubiquity of SMS. In developed markets like North American and Western Europe, Web/WAP technologies will be prevalent. The research predicts Web/WAP access will make up approximately 88 percent of total transactions in North America and about 80 percent in Western Europe by 2016.

While the big picture for mobile payments is good, Gartner's analysis said the next two years will see fragmented services and solutions. Technology providers will have to make sure their services fit local markets employing different access technologies, business models and partners, as well as different regulatory regimes, the company said.

The market will bring opportunities for service and solution providers who will need to cater to the local demand patterns to customize their offerings, Shen said.

"There will be a few global players that have the scale and resources to serve large customers and the mass market whose requirements can be readily satisfied by standard solutions," Shen said. "However, there will always be segments that cannot be sufficiently served by the global players. The demand of these segments can only be satisfied by specialized or local players who can better understand the segment and have specific solutions to meet the unique challenges."

For the most part, purchases for merchandise will drive transactions in North America and Western Europe, Gartner said, including both online and offline sales. Gartner singled out e-tailers like Amazon and eBay as leaders in mobile payments, but said it expected a large number of offline merchants to introduce mobile payment services in an effort to emulate the success of coffee retailer Starbucks.

Since its launch in January 2010, Starbucks' smartphone app has been the gold standard for mobile payments, accounting for more than 42 million transactions.

Gartner said that mobile payment growth in developing markets will be driven by money transfers and airtime top-ups, mainly due to the lack of secure methods for storing and transferring money.

Additionally, transit and parking will appeal across a number of markets due to the increased efficiency and convenience of mobile payments for those transactions, Gartner said.

Of all global markets, Gartner said Eastern Europe will experience the largest growth in users between 2011 and 2016, but Asia/Pacific will be the largest in terms of the sheer number of users, followed by Africa. According to the analysis, APAC and Africa will account for more than 60 percent of global mobile payments volume in 2016, with Africa, due to the high proportion of money transfers, the largest market in terms of transaction value. North America is predicted to be the third-largest region by transaction value in 2016 at nearly twice the value of Western Europe

For more stories like this, visit the Trends/Statistics research center.

Photo: Library of Congress (and not of any Gartner researchers!)

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User Comments – Give us your opinion!
  • Abraham Paul
    59615336
    Phones can save fuel, time and effort.
    Auhor: P. Abraham Paul Dated 15 May 2012

    Introduction: People around the world, especially those in the developing countries are reeling in financial burden due to rising cost of living without commensurate increase in per capita income. The gross inequity in the distribution of wealth and resources and wide divide between rich and poor magnifies the malice multifold. It is highly disheartening to see the humanity in spite of quick advancement in every field during past few decades is unable to find methods and solutions to get over this sad situation. Over and above the path of growth greatly cause to degrade the harmony and wellbeing of the nature and environment we live.

    1. Over exploitation of natural resources and is extensive consumption have become greatly harmful to the extent that the future of humanity is under perennial threat. Digging out expending coal, oil and natural gases and metal ores are causing unbalance in Earth’s eco system and pollute the environment. Therefore, it has become immensely important to find alternatives to get over these problems before it is too late.
    Top priority goes to alternate energy by switching over to Solar, Wind and Tidal, Bio energy while developing and usage of systems and products that can work on lesser energy.

    Other area of priority is to use IT based products and services to reap its full benefit for the betterment of humanity. One such opportunity is to deploy modern era Information Communication systems and networks enabling people to save on fuel time and effort.

    With modern means of ICN, it is possible to do most of the types office jobs sitting at ones home. Large array of Phone based services, both with Mobile and fixed are now available, accessible and affordable to common man. Various forms of money management and receive and pay by phone services enable all sorts of day to day money transactions using phones at any time from anywhere.

    Please see my blogs on this topic in www.paulsblog.wp.com

    2. Money management using phones as a service can take care of easy payment mechanism to directly transact (receive and send) virtually all form day-to-day micro/macro e-payments such as salary / pension of employees, all sorts of government’s welfare payments, pensions, payments related to Right to food, Right to Education and health care, interest / dividend payments on deposits, Payment for utility bills, taxes and service charges, School and College fees, Payment to job contractors and job workers, by employers to employees, Bill payment in shops, sales outlets & malls, cinema halls, petrol bunks, various travel ticket vendors and vending machines, taxi and auto fares, road and bridge toll payments, quick transfer of money to friends, spouse, pocket money to children, small personal and business money lending, transactions with Micro-finance agencies and franchisees, crediting money into bank and Post office accounts etc., without involving banks, post offices credit card companies and other money transfer agencies.

    As most of the day-to-day money transactions could be done sitting at home/office or from anywhere any time without need to commute and therefore will help to save time, fuel and reduction in road usage, traffic congestion and pollution.

    With more and more money management done with e-transactions like Pay by Phone (PBP) method, printing of money need be less and can save a lot to the exchequer.
    Pay by Phone systems can become an effective tool to realize ‘Financial Inclusion’ of people in the lower strata. There is a need to urgently implement non-banking and non- internet dependant solutions to realize financial inclusion of people in the lower social and economic strata. The banks, both nationalized and private are white elephants always with an eye on profit rather than service. Whatever said and done, banks will not be able to effectively serve people in the lower economic strata in urban as well as rural areas. Even with Banking correspondents, formal banking procedures are not user friendly for illiterate and poor customers especially for the women and aged. Similarly, services of most of the Micro Finance Institutions are also unaffordable to people in the lower economic strata. Various pay by phone systems would make micro money payment facility available, accessible and affordable to everyone; including people in the lower economic strata at an individual level who is able and eligible to have phone in urban and rural areas.
    For example: A person can avail loan against his small gold deposit with the Service provider, can get a credit in his account, use it and pay it back with nominal interest, in installments any number of times from anywhere any time transparently without any human intervention.

    Crediting money into users account can be done using pre-paid coupons available from franchisee outlets or by transferring money from Post office or bank accounts to PBP account or through any other PBP user from their account. For example money can be transferred from PBP account of spouse or parent to children or between friends..

    Solar powered energy to support the phones and other user end devices in the POS. To make available the eco system to power Mobile phones and Set top boxes at user premises where regular electric supply is not available or cannot be afforded by villagers in rural areas, solar powered mobile phone chargers etc., to be provided at subsidized cost. Facility for free charging mobile phones could be provided at public places, post offices, panchayat offices, bus stations / Rly stations. etc.

    Hard cash can be obtained at PBP franchisee outlets or from PBP cash vendors on nominal discount. By transferring money into their PBP account.
    PBP Service can be extended to Land Line phone users. PBP service such as payments of Utility bills, Service charges etc and transfer of money to any PBP user account can be extended to Land Phones also as the numerals, * and # keys used in USSD messaging are available in land line phones. IVRS incorporated with PBP system can take care of the transactions between Land Phone and PBP system.

    3. The business part: PBP deals being virtual e-transactions, and therefore, most of the real money remains within the PBP system. This opens out enormous business potential for various stake holders associated with PBP business.
    There will be above billion phones in India soon. With a modest assumption of a monthly average of Rs.10000/- transaction per phone, the annual turn around of the business will be a mind bogging sum in hundreds of Trillions. The huge excess liquidity available with PBP Service provider can be profitably deployed in various instruments of money management products within regulatory norms.

    PBP service can be provided free of charge to users. With above business logic, it is possible to provide PBP service free of cost to users which will make the system popular with all types of phone users that will enhance PBP usage.

    Share of revenue for stake holders. With the enhanced money business from this un-banked value added service, there will be enough profit share for various stake holders, the Telecom service providers and others, involved in PBP business.

    Un-banked Mobile Money Management is a must, but need to be regulated. Setting up of disparate Money management systems, product and services by various parties without any regulatory arrangement will not deliver desirable results especially for financial inclusion and empowerment of people in the lower strata across the country. Therefore, government should take immediate steps to bring un-banked money management service under regulatory controls through National Payments Corporation of India (NPCI) under the ambit of RBI.

    4. Success of PBP service depends on the following aspects:
    PBP system shall provide service to all Service providers across the country.
    PBP shall be a common centralized system that shall be available, accessible and affordable to all types of users.
    Since the system involves high volume of very low value money transactions, the service shall be without any additional charge. Any cost involved on service shall be compensated by profitably deploying the liquidity available to them in the operation process.
    It is necessary that PBP subscribers, utility providers, vendors, shops, banks, Post offices etc involved in PBP service are able to deal with a common PBP service provider, to make the service simple, user friendly and efficient, and to become profitable and effective.
    Therefore, to make the system and service succeed, the money management system should be able to offer universal service anytime, anywhere, for every form of payment. To realize this, the PBP system shall be ideally a common, centralized, stand-alone, third party system that is set up by the consortium of Telecom service providers or by a third party on revenue / profit share basis with the stake holders involved.
    A solution to resolve this impasse between Government and telecom Service providers is to have an exclusive banking system associated with the PBP service providers that is set up as a 3rd party system by the consortium of PBP Service providers and controlled by NPCI under the ambit of RBI.
    ------------------------------------------------------------------------------------
    Abraham Paul. P
    Ex: Vice President (TS) SPCNL, SIEMENS ICN / G.M & SMT TBG BPL Mobile, TES (I) DOT India. papaul@gmail.com
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