Mobile devices embedded with chips will replace plastic payment cards over the next five years and will be used to make payments by around 50 milllion customers, according a study by Javelin Strategy and Research.
Mobile phones will be a way of introducing electronic payments capability to a larger number of consumers, says Javelin. The availablilty of contactless mobile phone payment services will spur an additional 30 million customers to use the technology, with adoption expected to reach 50 million by 2012.
James Van Dyke, president and founder, Javelin, says although banks are making contactless cards available to customers now, contactless in card form "is an insignificant train stop en route to the important destination of mobile payments".
According to the report, mobile payment platforms, consumer in-store cards and electronic payments growth will be dependent on the continued availability of higher-functioning hand sets. These hand sets will also provide further motivation for merchants to accept contactless payments.
Javelin says networks and issuers need to motivate wireless carriers to support mobile proximity payments in order to bring them into the mainstream.
Ealier this year former Visa USA president and CEO John Coghlan called for closer collaboration between the payment card and mobile industries in order to realise the full potential for convergence between the two markets.
Speaking to delegates at a conference in March, Coghlan said the convergence of payments and mobile communications was inevitable.
Earlier this week MasterCard said customers that participated in a NFC mobile phone PayPass pilot programme preferred the contactless technology to traditional contact-based cards and made payments more often.
MasterCard teamed with Taipei Fubon Bank and Taiwan Mobile to launch the trial earlier this year. A survey of the participants found that customers using the Nokia 3220 equipped with MasterCard PayPass made transactions more often when compared to using traditional contact-based cards.