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Positive Progress Predicted for Mobile Payments

Infectious enthusiasm alert! Analysts say the mobile payments market is about to explode in both developed and emerging markets.

Juniper Research Ltd. predicts that nearly half of all mobile phone users worldwide will pay by mobile for digital and physical goods by 2014, a growth spurt of nearly 1 billion users compared to 2010.

Berg Insight AB forecasts a more conservative number of worldwide mobile banking users at 894 million by 2015. That represents a 59.2 percent compound annual growth rate from where Berg says it stands today, at 55 million users. This global number already doubled between 2008 and 2009, and Berg says it will almost double again in 2010.

Driving some of the growth are big retailers reaching consumers with a combination of dedicated applications and a fully functional mobile Website, two access paths that some see as competing.

eBay Inc. (Nasdaq: EBAY), Amazon.com Inc. (Nasdaq: AMZN), and Digby are among the first to cash in on the mobile Web/app store combo. All three launched multi-lingual mobile Websites that make it convenient for users to make one-click purchases.

eBay, for example, has a mobile Website and uses three mobile apps to help it to achieve its goal of $1.5 billion in mobile sales this year. It already topped off 2009 with $600 million in mobile sales, helped in part by its PayPal integration. This interview has more on PayPal's recent upgrades and its perspective of the mobile payments market:

Amazon isn't far behind. It trails eBay as the second-most-trafficked mobile site for physical goods.

Issues surrounding security and consumer comfort levels have slowed the mobile payments market. But with the Web browsing experience already rich with coupons and advertising, mobile payments are becoming the next step, according to Juniper Research analyst Howard Wilcox. As long as the user experience is easy, consistent, and maybe even enjoyable, consumers will keep coming back, he says.

For this reason, there are no shortage of vendors and third parties pursuing the mobile payments space, but the question for wireless operators is: How can they cash in? (See Nokia Announces Mobile Payment Service, China Mobile Opens $5.8B Bank Account, AlcaLu Opens Up Mobile Wallet, and Amdocs Buys MX Telecom.) To date, most aren't. (See CTIA 2010: Can Carriers Cash In On Mobile Payments?)

Carriers own the billing relationship with consumers and are the easiest conduit for those looking to tack a purchase on to their phone bill. They are also eager for a cut of app revenues and offer in-app purchases in many of the storefronts hosted on their handsets. Wilcox says that in-app billing will play a key role in taking purchases beyond one-time clicks to ongoing revenue streams for the payment facilitator -- whoever that may be.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

sarahthomas1011 12/5/2012 | 4:38:36 PM
re: Positive Progress Predicted for Mobile Payments

The use cases for mCommerce are really interesting, but it's still SMS doing most of the work today. And, Wilcox said that users are purchasing digital goods, not physical, more than anything. Good ol' ringtones are still the most popular.

Gagandeep Kaur 12/5/2012 | 4:38:31 PM
re: Positive Progress Predicted for Mobile Payments

There has been a lot of interest from the operators in India to tap the mobile payment market--Bharti has conducted a pilot with State Bank of India and Reliance has a tie up with HDFC Bank. Mobile payment has huge potential in a market like India where the number of mobile subscribers is more than 500 mn...the Government sees it as an important way of extending banking access.

sarahthomas1011 12/5/2012 | 4:38:16 PM
re: Positive Progress Predicted for Mobile Payments

I spoke with an analyst who said that mobile operators in developed markets will only ever be passive participants and won't make money on mCommerce. Do you think the same applies to a market like India? Or are operators trying to have a more active role in facilitating payments and dealing with the cash?

Gagandeep Kaur 12/5/2012 | 4:38:13 PM
re: Positive Progress Predicted for Mobile Payments The operators in India might not make big money from mCommerce but the scale of the market will ensure that they donGÇÖt lose money. As of now they are not playing a very active role in facilitating payments...
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