Mobile Payments: $860 Billion By 2013?
At the Center for Future Banking we are actively examining the mobile space and attempting to understand the technical, social and business drivers that will define the mobile payments ecosystem. The announcement a few weeks back within Informa Telecoms and Media’s recent report, Mobile Payments and Banking, caught my eye.
Since the turn of the millennium we have heard that one day the mobile phone could replace the humble leather wallet, by storing electronic cash and enabling convenient electronic transactions. Yet so far, except for a few isolated cases, there has been little evidence that the consumer has embraced this new paradigm despite the availability of mobile payment and banking services in most markets worldwide. However, according to Informa Telecoms and Media’s recent report, Mobile Payments and Banking: Worldwide Market Analysis, Strategic Outlook & Forecasts to 2013, this day is getting closer.
Informa Telecoms & Media forecasts that in 2013 almost 300 billion transactions, worth more than US$860 billion, will be conducted using a mobile phone - a twelve-fold increase in gross global transaction values in just five years.
There is no doubt that the mobile internet is entering a substantive phase. For many years, a myriad of factors have held back the development of truly breakthrough applications that would capture hearts and minds; applications capable of driving through obstacles hampering consumer adoption. In fact, until just the past year it seemed as if the potential of mobile and mobile payments related services to create much value at all would take many years to develop. And while the ecosystems from a non-US perspective are fairly robust, the US picture was moving slowly.
But that is changing. In April 2008, the number of cellular users worldwide passed the 3 billion mark and reached an estimated 4 billion by year end. Growth in third-generation (3G) penetration is also accelerating, reaching nearly 7 percent of the global population by the end of 2008. Now, it seems as if we are reaching an inflection point, one that could have dramatic impacts to current value chains. And even more dramatic effects for participants and current ecosystem players, with a potential to redraw the playing field.
Still, the remaining challenges are real, and will need to be addressed jointly by a wide range of participants, including telecom, banking, regulators and governments. And this does not even touch the potential for wide ranging cross-industry collaborations around mobile banking, media and health. There is no doubt that the stakes are high - I put them at somewhere around $860B.
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March 15th, 2009 at 8:17 am
Not only mobile payments, i feel other banking transactions through mobile is going to be disrupter in the market. When the internet boom started late last decade, everyone thought internet banking is going to be the next big thing. It took almost a decade. But we may not take so long for mobile banking and mobile payments especially since, unlike internet mobile communication is a basic necessity to everyone. In a populous country like india and china where mobile markets are growing at a cancerous rate not seen by any other country(every operator is addition about 3-4 million subscribers every month), i wont be surprised if mobile payments becomes the next big thing in the coming years.
March 19th, 2009 at 2:23 pm
I wonder if anyone thinking about compliance (esp. tax and money laundering) in all this. Thing about cash is it is anonymous. eMoney solutions all trackable - deters widespread adoption I would say (being among the law-abiding myself, but hopefully a savvy student of human nature.) Adam Gordon - Author “Future Savvy,” Amacom Press, 2009
March 19th, 2009 at 6:20 pm
I can’t wait! What will be the effects of this increase in mobile payments on banking operations? Will we see mobile payments processing centers or will we be able to automate most of these processes?
March 24th, 2009 at 6:13 pm
Maybe the grow in mobile devices makes the payment even less relevant to the overall transaction. If the person no longer needs to concern themselves with the payment instrument and the focus of attention is on what happens before and after the payment, which is what really matters then it makes the act of paying the least significant act of the consumer.
The mobile devices make it possible for alternative networks to exist that do not use the traditional payment systems therefore allow for real innovation to take place. It would require the US carriers to spot locking in customers by signs of this are already occurring and in the near future phones will be so cheap as to no longer be necessary to have them subsidized thus opening up a new era of mobile innovation that so far has been constraint by a few large companies.
As for mobile payments, that may not happen until contactless payments is pervasive in the marketplace. The reason is that innovation is discontinuous but the consumer does need to learn the new behavior before wide adoption takes place. The proximity wave or tap of the contactless card that are issued by only a few banks today will train the consumers in the new expectations. Those companies that have innovated will be in the best position to seize the mobile payment market when it emerges.
March 25th, 2009 at 9:22 am
The $860B figure is exciting and intriguing at the same time. I wonder whether this points to beginnings of fundamentally a new economy - like what internet and online commerce generated or just a zero sum migration?
Mobile Payments seems to me a natural progression of things:
cash->checks->cards->Smart cards->
commands issued over internet/networks (online) ->
commands issued over mobile network.
Does the figure of $810B represent the natural growth progression or implies much more than the normal natural growth? with some new multiplier effects?
Furthermore, the key question is what will change in terms of the value chain - reduction in oveall transaction costs, sharing of earned-value fairly across the value chain, entry of new entities in the chain such as mobile operators.
Currently there is more or less a deadlock amongst the major players (Cards Issuers, Merchants and Mobile Operators) What developments and/or disruption is likely to change this? Would sheer scale and magnitude of the mobile payments trigger changes?
On the internet side, security and escrow services enabled likes of Paypal to fill a major need and earn their position in the value chain. Are there new compelling counterparts for the mobile world?
Would appreciate your thoughts on what such new and unfilled needs are likely to be generated by the increase of mobile payments? which will lead to new value chains and larger economies?
March 26th, 2009 at 10:30 am
[...] the Center for Future Banking they are actively examining the mobile space and attempting to understand the technical, social and [...]
March 27th, 2009 at 1:31 pm
I make it a point to stop off at a McDonald’s or convenience store to buy a cup of coffee nearly every morning. I have a BOA credit card stored in my 6131 NFC handset and I always use it to buy the coffee. It is almost a game. I watch the look on the clerks face as I wave the phone to make the payment. Several times the clerk has called the other store staff to watch my “trick”. Customers behind me in line often ask questions. They want to know where they can get a phone like that and what credit card do they need. The same sort of thing happened when I used the phone to get on the MTA subway in NYC.
The point is that end consumers, when exposed to the technology, love it and they don’t have to be sold that it is useful. Nirvana will come when a top notch device like the iPhone has an easy to use wallet function combined with NFC. Of course the bulk of the $860 Billion that is projected will come from less sophisticated devices and that is OK. The iPhone will highlight what is possible.
Sure, infrastructure will be needed. More merchants with contactless support are a big issue at the moment but I think there are enough to get the snowball rolling. A trailblazer is needed to let the world know this is for real… Baby steps should be taken that will allow for a course correction as more knowledge comes to light……. At that time the $860 avalanche will begin.
May 5th, 2009 at 1:15 pm
The ease of banking has developed into a model for all other forms of business. As we move into a no cash society we are slow to remind ourselves that all of the transactions being done are recorded to data bases and are being reviewed by some that are not our friends. We are forgetting that when Social Security Cards were first purposed that the public went nuts until the government promised that the numbers were never going to be used for personal identification other than for social security.
The blogs that are written by corporations not only gives out the information that is selected by the corporation’s “who-do’s” of their money info’, corporate growth etc., but also allows the corporation to try the waters. These sites allow the corporations to discover the mood of the public on certain topics. It allows the corporation to basically see what they are able to get away with.
The corporate blogs, such as this one glows with successful corporate earnings and projections. It may also be a way for them to publish all the news that they feel is fit to print.
But these types of sites are good sites to find out ”who is who” within the corporation. It also is a good source to read of some of the corporate developments. What is in the makings for the future with offers such as wider use of e-banking.
In days such as we are now living in people are on the lookout for any and all information on the subject of anything that involves them. Blogs like these provide some of such information. It also allows the individual researcher to discover the feelings, fears and concerns of other that are like involved.
I chose this blog because I have accounts at Bank of America. But I have never visited a blog for BOA.
Maybe I’ll check it out every now and then.
May 9th, 2009 at 1:08 pm
I would tend to agree
May 27th, 2009 at 5:36 am
Maybe 2013 is a bit stretched. But i see no reason why $860 Billion would be overachieved. It is a matter of adopting to the changes in the banking environment which sooner or later will happen just as people adopted to internet.
September 1st, 2009 at 5:56 am
Using cards and nfc enabled devices at merchant terminals is fine. What about Cashless, Cardless and Device-less transactions? Stumped? What if my transactions can be completed by 2 factors which I know…? I guess MobiBucks is venturing into that space…A very simple concept of Cell Phone # and PIN on a customised POS device. Would the Student and Yuppy crowd be wowed? Will the growing no of frauds drive people to low ticket pre-paid methods of transaction?
September 19th, 2009 at 5:19 am
Wow, can you imagine the fees for both the greedy banks and mobile phone networks?
September 21st, 2009 at 4:05 am
This amount can increase as now-a-days mobile based payment and e-banking is just growing on and on. So in 2013 this amount can increase because still I suppose 40% people not using these features who will start using it. So this margin will be crossed.
October 22nd, 2009 at 12:58 pm
Is mobile banking available in Brazil?
November 9th, 2009 at 5:02 pm
[...] world wide market size for mobile payments is estimated at 860 Billion by 2013 (see link below) (Mobile Payments: $860 Billion By 2013? | Future Banking Blog) With approximately 230 million mobile subscribers in the United States (over 70 percent of the [...]
November 9th, 2009 at 5:07 pm
[...] world wide market size for mobile payments is estimated at 860 Billion by 2013 (see link below) (Mobile Payments: $860 Billion By 2013? | Future Banking Blog) With approximately 230 million mobile subscribers in the United States (over 70 percent of the [...]
November 9th, 2009 at 5:19 pm
[...] world wide market size for mobile payments is estimated at 860 Billion by 2013 (see link below) (Mobile Payments: $860 Billion By 2013? | Future Banking Blog) With approximately 230 million mobile subscribers in the United States (over 70 percent of the [...]
November 10th, 2009 at 8:44 am
[...] world wide market size for mobile payments is estimated at 860 Billion by 2013 (see link below) (Mobile Payments: $860 Billion By 2013? | Future Banking Blog ) With approximately 230 million mobile subscribers in the United States (over 70 percent of the [...]
November 10th, 2009 at 8:45 am
[...] world wide market size for mobile payments is estimated at 860 Billion by 2013 (see link below) (Mobile Payments: $860 Billion By 2013? | Future Banking Blog) With approximately 230 million mobile subscribers in the United States (over 70 percent of the [...]
November 10th, 2009 at 10:46 am
[...] world wide market size for mobile payments is estimated at 860 Billion by 2013 (see link below) (http://futurebanking.bankofamerica.com/mobile-payments-860-billion-2013_886) With approximately 230 million mobile subscribers in the United States (over 70 percent of the [...]
November 10th, 2009 at 11:35 am
[...] world wide market size for mobile payments is estimated at 860 Billion by 2013 (see link below) (Mobile Payments: $860 Billion By 2013? | Future Banking Blog) With approximately 230 million mobile subscribers in the United States (over 70 percent of the [...]
November 10th, 2009 at 10:29 pm
[...] wide market size for mobile payments is estimated at 860 Billion by 2013 (see link below) (Mobile Payments: $860 Billion By 2013? | Future Banking Blog) With approximately 230 million mobile subscribers in the United States (over 70 percent of the [...]
November 12th, 2009 at 4:19 am
Yep!