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NFC No Answer for Mobile Payments, But Alternatives Offer Promise

Once, NFC (Near Field Communication) was the leading contender among technologies that could enable mobile payments. But NFC has developed more slowly than anticipated, and will not offer viable large-scale mobile payment solutions for at least six years. In the mean time three existing technologies — SMS, mobile Internet and downloadable mobile applications – have the potential to deliver what NFC (so far) cannot.

“About half of all purchases made by consumers last year were made with cash,” notes ABI Research senior analyst Mark Beccue. “Consumers would in many cases prefer cashless transactions when away from home. So around the world solutions providers have leveraged SMS, mobile Internet and downloadable mobile applications to enable mobile commerce and payments. ABI Research calculates the potential revenue in 2013 from mobile transactions using these methods at about $18 billion: a significant opportunity for payment processors.”

A new ABI Research study examines the potential for mobile payments in four key vertical markets that will drive adoption: taxis, parking, movies, and Internet shopping. While the latter is usually done using credit cards anyway, the first three are areas in which mobile payments could replace cash transactions. The research found that Internet shopping would account for almost three quarters of this mobile commerce revenue in 2013. A further 15% would come from parking, with the balance split about evenly between taxi fares and movie tickets.

Beccue concludes, “Companies already seizing this mobile payment opportunity include parking solutions provider Verrus, Bharti Airtel and movie theater operators in India, and notably eBay and Amazon – the world’s largest e-commerce merchants – which have enthusiastically embraced mobile transactions with very comprehensive offerings.”

The new ABI Research study “Mobile Commerce and Payments” examines several emerging markets in which consumers are or will be using their mobile devices to purchase goods or services using SMS and mobile Internet. It highlights important players within the space, suggests who should play and who will benefit, and outlines what MNOs, merchants, and financial services providers can do to take advantage of these opportunities. [ABI Research]

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