The mobile payment industry has reached maturity and is a well-established market ecosystem. With growing competition, the market is seeing a wave of partnerships and acquisitions as well as new technical solutions and innovative business models. As such, the low value cash sector, which has still not been sufficiently penetrated and therefore offers potential revenue prospects, is proving to be both the challenge and opportunity.
‘The economic downturn in Europe has negatively influenced all business activities and government authorities are eager to find new revenue sources,’ notes Jean-Noel Georges, Frost & Sullivan. ‘Cash is expensive to manufacture, manage and make secure. The black market keeps increasing thanks to unofficial cash transactions resulting in insufficient tax collection.’
European authorities are keen to move from traditional coins and banknotes to electronic money for all transactions, including small amounts. This shift will allow tracking of all payments and help align budget deficits. ‘Moving from traditional money to electronic transfers opens a whole range of new opportunities for the industry,’ continues Georges. ‘While there is a really important market to capture, existing business models are not fully relevant in the emerging scenario. The race to find the best approach to catch these opportunities has already started.’
One of the most common approaches to seize this market is to deploy contactless cards. ‘We have observed a rapid increase in the number of contactless cards shipments and contactless-enabled POS terminals. According to Frost & Sullivan’s estimation contactless card shipments to Europe increased by 93% in 2011, while contactless terminals number has grown by more than 100%,’ adds Georges.