Gartner predicts significant mobile payment growth through 2016

 
May 29, 2012

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!)


Topics: Consultants , Contactless / NFC , Money Transfer / P2P , Trends / Statistics


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