Mobile payments set for take off, says Frost & Sullivan

Mobile payments set for take off, says Frost & Sullivan

Mobile commerce is set to take off within the next few years, generating £25 billion in mobile payments by 2006, according to a new study by marketing consultancy Frost & Sullivan.

The study considers mobile expenditure for a number of key user payment scenarios including automated point-of-sale payments (vending machines, parking meters and ticket machines); attended point-of-sale payments (shop counters, taxis); mobile-accessed Internet payments (merchant WAPsites); mobile assisted Internet payments (fixed Internet sites using phone instead of credit card), and peer-to-peer payments between individuals.

Results forecast mobile-accessed Internet and peer-to-peer payments will make up the bulk of payments, accounting for 39% and 34% of spending respectively in 2006.

Ben Donnelly, research analyst at Frost & Sullivan, notes that it is more a question of how and when, rather than if, mobile payments will gain mass market acceptance.

"Analogies can be drawn with the introduction of credit cards 50 years ago, currently the principle alternative to cash. They were perceived as a niche product and unnecessary luxury for many years until global technology standards made them viable for the mass market," says Donnelly.

The report emphasises a number of benefits that will drive consumer and merchant adoption of mobile payments. Mobile users will be able to free up their time by making purchases walking down the street, paying bills while waiting for a train, or paying back a debt to a friend immediately after a meal. When purchasing goods online, consumers will not have to divulge their credit card details over the Internet, but instead supply their mobile number.

Merchants will be able to reduce costs as a result of lower commission charges and registration fees by mobile payment providers than credit cards companies, says Frost & Sullivan. Also, research shows providing mobile payments as an additional purchase option directly increases merchant sales by 20 per cent.

The study also points to the opportunities m-commerce presents to mobile network operators and payments start-ups, both in cooperation with and in competition to financial institutions.

Donnelly belives: "Banks want control over mobile payments, but at the same time, they are keen to collaborate with operators in the development of other wireless banking services."

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