Advisory firm KPMG has forecast that global m-payment transactions will grow by 97% per year, over the next 3 years, as consumers demand greater NFC services on smart-phones and tablets.
According to the study, the value of mobile payment transactions is expected to rise from over £70 billion in 2012 to £591 billion by 2015. KPMG said the growth in the global m-payments would be fuelled by consumer demand for devices with near field technology – tablets and smart-phones able to interact with scanners at the point-of-sale and immediately transfer funds. Over the same period, the share of m-payments through SMS is forecast to decline from nearly 75% in 2010 to 53.3% in 2015, due mainly to the increasing adoption of NFC technology.
‘Growth in the m-payments marketplace will be driven by customers’ increasing need for convenience and the development of a raft of new applications enabling commerce in the palm of our hands,’ said David Hodgkinson, senior manager in KPMG’s customer and channel consulting team. Hodgkinson added that while premium SMS currently dominates mobile payments, he expected cloud-based services to account for 37% contactless payments by 2015.
The increased recognition of m-commerce as an alternative to cash or credit card payments among retailers is also thought to have led to the rise in smart-phones. According to KPMG’s report, smart-phone shipments accounted for 29% of all mobile phone sales in 2011 – almost double the figure sold in 2009. The data also shows that 21% of retailers already view m-payment capability as important enough to be their ‘main activity or, at least, a key enable’. Just 2% see m-payments as unimportant, believing it will have no bearing on their organisation.
Competition among core technology players is also heating up. The report cited Ace’s announcement to launch NFC-enabled smart-phones before the end of this year and HTC teaming up with the Chinese bank card network, China UnionPay, to turn their smart-phones into digital wallets for use in designated department stores, restaurants, supermarkets and cinemas as evidence.
However, Gerry Penfold, a partner within KPMG Risk Consulting, says there are concerns with the security of mobile payments. ‘There is certainly scope for collaboration between smart-phone manufacturers, telecom companies and retailers but the big, unanswered question revolves around who the customer will trust with their data and their m-cash,’ he said.
Penfold said that while speed and security of payment will be the mark of success for consumers, for technology and telecoms companies, speed to market will be critical, adding that how quickly they can respond will depend on the impact of regulation. The report warns that tightening regulatory requirements will force the players to consider how they use customer data. For example, with China becoming a significant market for m-payments, the government has introduced licence requirements for third-party payment providers. Similarly, the European Payments Council has issued guidelines to develop standards around m-payments.