Remote payments to drive $22.5 billion m-commerce market

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A white paper commissioned by Vesta Corporation highlights the significant opportunity that remote payments present to mobile operators. The white paper, compiled by Informa Telecoms & Media, reveals that end-user revenues from m-commerce services, delivered over cellular networks, are expected to grow to more than $22.5 billion by 2014.

These m-commerce services will include mobile banking, remote mobile payments, local mobile payments and mobile money transfers.

According to Informa Telecoms & Media, money transfer services are expected to drive end-user revenues of $6 billion by 2014. This represents a significant and immediate commercial opportunity for mobile operators compared to NFC technology, which requires a large upfront investment and is expected to take at least three or four years to reach critical mass.

Mobile operators continue to try and identify a strong position in the content and services value chain, particularly as the applications market is currently dominated by over-the-top (OTT) providers. These same OTT players are also trying to seize the NFC market initiative from the operator community. The study reveals that having a suite of m-commerce services will be instrumental in helping operators increase customer stickiness, reduce churn and drive incremental revenues in the longer-term.

Mobile operators are perfectly placed to capitalize on this market opportunity. They have the strategic capability to use their existing prepaid charging experience as a basis to develop airtime transfer services.

These can then be extended to deliver mobile payments and money transfer offerings as demonstrated by leading operators in developed and developing markets.

‘By driving the adoption of mobile wallet functionality through prepaid top-up, content purchases and bill payment services, operators can increase their subscribers’ comfort levels with m-commerce transactions,’ said Joshua Rush, VP marketing at Vesta Corporation. ‘This will enable operators to position themselves at the heart of the m-commerce value chain, ahead of over-the-top players and in pole position to claim a significant share of the projected revenues.’

According to Informa Telecoms & Media, enabling m-commerce services can also help operators benefit from the growth of the mobile applications market. Many over-the-top providers launching app-stores are interested in using operator billing to generate a large number of paid-for transactions, despite having to share revenue with the operators. Therefore, operators can generate additional revenues by enabling the billing and payment for third party mobile applications, assuming they can negotiate competitive rates of commission with the application store providers.

‘M-commerce clearly presents exciting opportunities to mobile operators,’ says Shailendra Pandey, senior analyst, mobile content and applications at Informa Telecoms & Media. ‘It makes sense for operators to place more focus on utilizing their existing top-up and billing systems to drive m-commerce market growth.’

Pandey continues: ‘to do this effectively, it is important that operators form partnerships with other players that have specialist knowledge and proven technology in the m-commerce and e-commerce space. This will ensure they develop and deploy secure and attractive services for their subscribers.’