Mobile phone based payments to reach $37bn by 2016

Mobile & tablets

by Allan Swann| 19 January 2012

The rise of NFC mobile phone payments will see industry earnings reach $37bn (£24bn) by 2016, according to a report.

Revenues from mobile phone based payment systems are expected to boom, reaching $37bn (£24bn) by 2016.

Informa sTelecoms and Media's research points to nearly two thirds of these m-commerce payments being for physical goods and international monetary payments.

"Currently the majority of m-commerce transactions - including mobile banking, remote and local payments, and money transfers - are conducted using SMS, especially in developing markets," said Informa analyst Shailendra Pandey.

"In the next five years, traffic will shift steadily onto more secure and lower-cost bearers, such as Unstructured Supplementary Service Data and packet data, mobile applications, and NFC in the case of local payments, with a corresponding fall in service revenue per transaction."

This year looks like the year Near Field Communication (NFC) kicks into high gear. The technology is fast becoming ubiquitous in all upcoming mobile phones. NFC is essentially a virtual wallet that consumers can use to purchase goods through their mobile devices. The new Sony line of smartphones carries the technology, as will the new iPhone and Samsung phones.

NFC devices can be used in contactless payment systems, similar to some credit cards and smartcards. This will allow mobiles to replace those devices. Potentially your phone could be your credit card, your office swipe card and your train ticket all rolled in to one. It can also theoretically be used as an identity document (a passport for example), multiplayer mobile videogames and wireless connections similar to Bluetooth or Wi-Fi.

The technology has long been subject to delays due to a lack of a universal standard. This was finalised last November amongst the GSM association members.

Pandey believes that this is likely to lead to the merging of the credit-card and mobile-payments business models, driving mobile phone companies, banks and credit card companies into competition with each other.

Operators are also pursuing their own individual branded NFC payment services, such as Google Wallet.

"There will be 'first-mover' benefits for those operators and service providers that are early to market with mobile wallet and m-commerce services as they will create greater subscriber 'stickiness' for their network and more churn from their competitors", said Pandey.


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