03 December 2016

100 million to pay by mobile phone by 2011

24 April 2008  |  15241 views  |  0 mobile keypad

The number of people making payments using their mobile phones globally is set to soar from 32.9 million in 2008 to 103.9 million in 2011, according to analyst house Gartner.

Gartner says SMS text messages will continue to be the dominant channel for mobile payments, although take up of wireless application protocol (WAP), unstructured supplementary service data (USSD) and near field communications (NFC) contactless services will also grow.

But despite the rapid take-up, Sandy Shen, research director at Gartner, is cautious about revenue opportunities that m-payments offer for banks and claims mobile operators have more to gain from the technology.

"Banks can justify the investment if they look at mobile as an extension of their existing channels and bundle payments with additional banking services," says Shen.

Mobile payments are most likely to succeed in developing markets where many people are "unbanked" and there are few payment options, says Shen. In contrast, the service is set to be seen as just an extension of existing options in developed markets.

But Shen warns banks may be hit by offerings from non-financial institutions like Obopay and PayPal, which are more proactive and offer better and cheaper services.

"These could threaten the lucrative card business should momentum build up," says Shen.

Asia Pacific dominates the mobile payments field, with a projected 28 million users in 2008 - 85% of the worldwide total. North America users are expected to hit one million this year while Western Europe is expected to have 499,000 users.

Shen says Asia Pacific will continue to lead the way on mobile payments for the foreseeable future, especially with the emergence of massive markets in India and China. Western Europe and North America lag mainly because of a more established payments infrastructure and greater concern over security. However, Gartner says NFC-based contactless technology may provide a breakthrough in these markets because of the convenience it offers and its "cool factor".

A separate study from Javelin Strategy and Research is also optimistic on the prospect of NFC-enabled mobile payments, but warns industry players must work together to drive adoption.

"Tap-and-go contactless payments will pave the way for cell phones and handheld computers to become 'electronic wallets,' packed with consumers' payment and merchant cards, coupon offers, even medical records, family pictures and more," says James Van Dyke, president, Javelin. "But consumers won't benefit until the primary players - card networks, financial institutions, mobile carriers, merchants and handset manufacturers - work together toward a unified, simple solution that lets everyone win."

Comments: (0)

Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

Cards and m-payments to speed demise of cheques - Visa

Cards and m-payments to speed demise of cheques - Visa

18 April 2008  |  9925 views  |  0 comments
Obopay partners Yes Bank for Indian launch

Obopay partners Yes Bank for Indian launch

28 March 2008  |  4729 views  |  0 comments
Western Union pilots mobile remittance systems in the Philippines

Western Union pilots mobile remittance systems in the Philippines

30 January 2008  |  10789 views  |  0 comments
Indian m-payments outfit PayMate eyes North American remittance market

Indian m-payments outfit PayMate eyes North American remittance market

04 December 2007  |  8435 views  |  0 comments
Mobile payments to soar - research

Mobile payments to soar - research

31 October 2007  |  10108 views  |  0 comments
Mobile payments set to take off in developing world - Juniper Research

Mobile payments set to take off in developing world - Juniper Research

10 July 2007  |  10897 views  |  0 comments
Banks can't compete with PayPal - Gartner

Banks can't compete with PayPal - Gartner

13 September 2005  |  10984 views  |  0 comments
Find out moreVisit capgemini.comFind out more

Top topics

Most viewed Most shared
Royal Mint to issue digital goldRoyal Mint to issue digital gold
6141 views comments | 22 tweets | 21 linkedin
ING pulls plug on P2P payments app TwypING pulls plug on P2P payments app Twyp
5478 views comments | 16 tweets | 15 linkedin
R3 and Calypso to develop blockchain trade confirmation systemR3 and Calypso to develop blockchain trade...
5399 views comments | 13 tweets | 12 linkedin
EBA told that tougher authentication will have a "chilling" effect on single marketEBA told that tougher authentication will...
5352 views comments | 18 tweets | 20 linkedin
UK challenger bank Masthaven opens for businessUK challenger bank Masthaven opens for bus...
5336 views comments | 15 tweets | 13 linkedin

Featured job

Find your next job