A new report from Gartner suggests that worldwide mobile payment transaction values will surpass $171.5 billion in 2012, which is a 61.9 per cent increase from 2011 values of $105.9 billion. The number of mobile payment users will also rise, up 32 per cent from 160.5 million last year to reach 212.2 million by the end of this year.
Looking ahead, Gartner expects global mobile transaction volume and value to experience 42 per cent annual growth between 2011 and 2016. It is also forecasting a market worth $617 billion with 448 million users in four year’s time.
Sandy Shen, research director at Gartner, says the mobile payments services and solutions will remain fragmented for the next two years, with local markets adopting different technology and business models, as well as operating under different regulatory conditions:
“There will be a few global players that have the scale and resources to serve large customers and the mass market whose requirements can be readily satisfied by standard solutions. However, there will always be segments that cannot be sufficiently served by the global players. The demand of these segments can only be satisfied by specialised or local players who can better understand the segment and have specific solutions to meet the unique challenges.”
In developing markets, Gartner says that money transfer and airtime top-ups will account for most transaction volume, and money transfers will account for the largest portion of the transaction value due to the demand for secure and efficient ways of storing and transferring money. Ticketing and transportation will also be significant in markets such as Africa and South Asia, where users can already buy bus and railway tickets using a mobile payment service.
In terms of technology, Gartner’s report suggests that SMS remains the dominant access technology in developing markets because of the constraints of mobile devices. In North America and Western Europe, mobile web access is preferred by users, and Gartner expects Web/WAP access to account for 88 per cent of total transactions in North America and 80 per cent in Western Europe by 2016.
As expected – given its lack of wide support – Near Field Communication transactions will remain relatively low through to 2015, although Sandy Shen says growth will start to pick up from 2016:
"NFC payment involves a change in user behaviour and requires collaboration among stakeholders that includes banks, mobile carriers, card networks and merchants. It takes time for both to happen, so we don’t expect NFC payments to come into the mass market before 2015. In the meantime, ticketing, rather than retail payment, will drive NFC transactions.”
For the 2011 to 2016 forecast period, Gartner sees Eastern Europe as experiencing the highest user growth; Asia/Pacific having the highest number of users; and Africa having the highest transaction value. North America will be the third-largest region by value in 2016 – twice the value of Western Europe.
A survey from South Africa’s Ikapadata this month shows that 25 per cent of surveyed township residents use their mobiles for accessing their bank accounts or sending money to other mobile users.
The survey found that 84 per cent of residents have a bank account and 16 per cent have a mobile money account with one of the mbanking providers (FNB eWallet, M-Pesa, MTN Mobile Money or WIZZIT).
However, only 9 per cent of people with a bank account have accessed it via their mobile in the last two weeks, and only 8 per cent of all respondents have ever sent money using one of the mobile services:
“Despite the low subscription rates to mobile money services, especially compared to other markets in Africa such as Kenya, there are signs for a positive trend in the future: 25 per cent of respondents who do not have a mobile money account yet are planning to subscribe to one in the next 3 months.”
Turning to mobile banking in general, the ‘World Retail Banking Report 2012’, published in April from Capgemini and Efma, looked at the relationship between banks and their customers, and found that 49 per cent of people were so unhappy with the service received that they might switch account providers. The survey, which covered 18,000 customers in 35 countries, looked at the various channels available to banks – mobile being one of them. In fact, Capgemini suggests that mobile is seen as the channel with most potential:
“While mobile banking is still in a relatively nascent state of maturity, it is a channel that will warrant more investment by banks to improve the customer experience. By 2015, more than 60 per cent of customers worldwide will likely use mobile banking.”
In fact, the report goes on to suggest that by 2015, 43 per cent of consumers will be using mobile banking tools every month, with 10 per cent using them on a daily basis.
A note of caution though – the report also says that mobile is currently offering the “least positive customer experience”. However, mobile banking has also improved the most amongst all channels, and Capgemini suggests that banks need to align their mobile strategies to better fit the size, profile and region of their targeted customer segments.
Two of world’s biggest banking groups have very different successes in mobile banking. It was reported this week that the Bank of America has reached 10 million ‘active’ mobile banking consumers, an increase of nearly three million year-on-year. This represents a 42 per cent annual growth rate – much higher than Gartner says is the norm.
Tara Burke, a spokeswoman at Bank of America in New York, was reported in Mobile Commerce Daily as saying:
“Customers want convenience and flexibility and to be able to bank on the go. They also want to be in more control of their finances and accounts and mobile banking provides that accessibility. It is about providing them the choice and offering multiple channels to bank.”
As such, Bank of America provides its customers with mobile apps for iOS, BlackBerry, Android, Windows Phone and Kindle devices.
Rather like UK-based Barclays, whose Pingit money transfer app was released on iOS, BlackBerry, Android. But unlike Bank of America, Barclays can only drum up 700,000 users (admittedly, the service has only launched in February, and it is focused more on person-to-person transactions). According to an interview in Computer Business Review, Barclays plans to release a more ‘full blown; mobile banking app later this year.
Mike Walters, head of UK corporate payments product management at Barclays, explained why the early version of its app took a basic and more limited approach than others (such as BoA):
“I think that if the guys in Apple and Google have taught us anything, it’s that consumers will use things if they are very simple and accessible to use. Not to sound patronising, but consumers tend to flock to things they have a natural affinity with and have the ability to use. We have focused on a utilising a very specific, easy to use interface.”
[Editor’s note: The above story was developed and written on Twitter this morning, as a series of tweets – our second and final experiment this week with social media for news analysis. This is an edited and extended version of this process, building on the feedback received via Twitter.]
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