An overwhelming 83pc of business executives surveyed by accountancy giant KPMG are convinced that mobile payments via NFC-powered smartphones that function as mobile wallets will be mainstream within four years.
The 2011 KPMG Mobile Payments Outlook survey of nearly 1,000 executives worldwide, including Ireland, primarily in the financial services, technology, telecommunications, and retail industries globally, found that 83pc of the respondents believe that mobile payments will be mainstream within four years, compared to only 9pc who see them as mainstream today.
In fact, 46pc believe mobile payments will be mainstream much sooner – within two years.
“We believe that exploding smartphone growth and myriad opportunities will grow mobile payments at a much faster rate than our respondents anticipate,” said Eamonn Russell of KPMG in Dublin.
Russell said: "The expected growth in consumer adoption of mobile payments globally gives Irish technology companies a great opportunity to broaden their product and service offerings to address this major trend in the payments market.
“A wide variety of options are ready for adoption, as several key players already provide or are rolling out mobile payment systems. And interest among consumers is growing, in line with the industry’s readiness to deploy them.”
The study also found that worldwide:
- 58pc said they have a mobile payments strategy in place
- 72pc of the executives said mobile payments are now, or will be, reasonably important in the future, with specialist online systems building on mobile’s leading position as a payment method, and m-banking and near field communication (NFC) gaining significantly greater traction than today.
Russell also highlights the role of financial infrastructure: “While there is consensus about the significant value of this opportunity among executives worldwide – the type and size of opportunity varies between developed and developing countries depending on depth and reach of the financial infrastructure in place.
“It’s also clear that those firms willing to engage in cross-industry partnerships and co-operation are more likely to succeed and dominate the market due to the complex set of business relationships required to deliver mobile payments to a mass market,” said Russell.
Security and privacy concerns
While the majority of the business leaders surveyed believe consumers are currently concerned about security and privacy when using mobile devices, they believe other factors are more compelling attributes of a successful mobile payment strategy. Specifically, 81pc believe convenience/accessibility is the highest attribute, followed by simplicity/ease of use, at 73pc, security, at 57pc, and low cost, at 43pc.
At the same time, business leaders, globally, view security as the main challenge to developing mobile payments strategies. Technology and adoption of the technology is a distant second, followed by privacy.
Race to lead the m-payments market
With the mobile payments industry poised to make a major leap in the coming years, several players are expected to play significant roles, though two groups of financial institutions are the current front runners, say respondents.
Banks, which scored the highest in level of importance in the value chain, and credit card companies will have the most important roles, according to business leaders globally.
They placed telecommunications companies third, ahead of specialist online payment players (eg, PayPal, Boku, Obopay), online service provider giants (eg, Google, Facebook, Amazon), retailers and technology companies.
Among US respondents, online service provider giants placed third, followed by specialist online payment players and telecommunications companies, which were rated of equal importance, retailers and technology companies.
Mobile payment methods
Each of these companies’ success can be tied to the prospects for the five current payment methods which are battling for a share of the market. These are:
M-wallet – uses mobile device as a wallet with account and transaction information stored on the devices’ SIM card
M-banking – direct access to bank services and information via the mobile device
NFC – short-range (millimetres) wireless communication technology that enables exchange between devices, such as between a mobile phone and a point of sale device at a checkout counter
Specialist online systems – online payment processing systems such as Google checkout and PayPal
Carrier billing – purchases are charged to the mobile phone bill.
The KPMG survey respondents, globally, see specialist online systems leading the pack, due to the fact that this method already has significantly greater penetration than alternatives, and its penetration is expected to increase. Respondents said specialist online systems have the greatest prospect for success, followed by mobile banking, NFC, carrier billing and the ‘mobile wallet.’
“While KPMG believes that these forms of mobile payment will all gain some traction, our view is that M-Wallet is one of the most exciting and promising payment opportunities,” said Tudor Aw, technology sector head, KPMG Europe.
“M-Wallet provides the momentum to move beyond payments to participate in the entire chain of mobile commerce, from consideration and brand awareness to purchase after-sales loyalty and care,” Aw added.