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May 29, 2012updated 23 Aug 2016 9:12am

Mobile payments to fly past $171bn in 2012

Global mobile payment transactions will pass $171.5bn this year, according to a new report.

By Allan Swann

This is an increase of 62% from 2011’s $105.9bn. The number of mobile payment users will reach 212.2 million in 2012, up from 160.5 million in 2011, according Gartner projections for mobile payments from 2009-2016.

"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 448 million users by 2016," said Sandy Shen, research director at Gartner.

The mobile payments market remains fragmented, with limited standardisation of service standards. Most mobile payment operators, banks retailers and mobile operators are developing their own mobile phone payment standards, such as O2’s Wallet. (see CBRs report on the state of the UK’s mobile payments industry here)

Globally this means that different countries will be using technologies, business models and partners, under different regulatory conditions.
"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," Ms. Shen said.

"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 specialized or local players who can better understand the segment and have specific solutions to meet the unique challenges."

While the developed world may be looking at HTML5 and mobile app solutions, SMS will remain dominant in developing markets.

Web access will account for about 88% of transactions in North America and about 80% in Western Europe by 2016.

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The increasing penetration of contactless payments via NFC is expected to cause mobile payments to rise in popularity. Gartner believes that NFC transactions will remain relatively low through 2015, with growth picking up in 2016. NFC will mostly be used for ticketing before then.

"NFC payment involves a change in user behavior and requires collaboration among stakeholders that includes banks, mobile carriers, card networks and merchants," said Ms. Shen.

E-commerce purchases as well as in-store purchases will benefit from mobile. Major online retailers such as Amazon and eBay have already developed strong mobile apps and have seen significant growth.

Developing markets will continue to be dominated by money transfer and airtime top-ups. Ticketing/parking also appeals across many markets because it can improve efficiency in transacting, as well as offering user convenience.

Eastern Europe will see the highest user growth between 2011 and 2016. Asia/Pacific tops all regions in the number of users, followed by Africa. The two regions combined will account for more than 60% of the global mobile payments volume in 2016. 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.



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