Global mobile payment transaction values are set to grow by 42% a year, say the analysts, but the market will be fragmented over the next two years and NFC payments won't hit the mass market until 2015.
Worldwide mobile payment transaction values will surpass US$171.5bn in 2012, a 61.9% increase from 2011's $105.9bn, according to a new report from market analysts Gartner.
More than fifty million additional people will use their mobile phone to make a payment in one form or another this year, bringing the global total of mobile payment users to 212.2m in 2012 — up from 160.5m in 2011.
NFC transaction volumes are predicted to remain relatively low through 2015, however, although growth is expected to pick up from 2016, according to the "Forecast: Mobile Payment, Worldwide, 2009-2016" report.
"NFC payment involves a change in user behavior and requires collaboration among stakeholders that includes banks, mobile carriers, card networks and merchants," says Sandy Shen, research director at Gartner. "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."
The mobile payments market will continue to experience fragmented services and solutions for the next two years, Gartner says. "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," the analysts explain.
"We expect global mobile transaction volume and value to average 42% annual growth between 2011 and 2016, and we are forecasting a market worth $617bn with 448m users by 2016," says Shen. "This will bring opportunities for service and solution providers who will need to cater to the local demand patterns to customise their offerings."
"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 adds. "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 specialised or local players who can better understand the segment and have specific solutions to meet the unique challenges."
SMS remains the dominant access technology in developing markets because of the constraints of mobile devices and the ubiquity of SMS, says Gartner. Web/WAP is currently the preferred access technology in North America and western Europe where mobile internet is commonly available and activated on user devices. Gartner expects web/WAP access to account for about 88% of total transactions in North America and about 80% in western Europe by 2016.
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. Ticketing and parking is also an area that appeals across many markets because it can improve efficiency in transacting, as well as offering user convenience, says Gartner.
Eastern Europe is expected to see the highest user growth between 2011 and 2016, albeit from a smaller user base, while Asia-Pacific tops all regions in the number of users, followed by Africa. "This also contributes to high transaction volume, where the two regions combined will account for more than 60% of the global mobile payments volume in 2016," says Gartner.
"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. North America is the third-largest region by value in 2016 and is twice the value of western Europe.