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Mobile Payments: Threat or Opportunity?

Mobile Payments: Threat or Opportunity?

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Additional Information
Price $2,795.00
Meta Description No
Publisher Datamonitor
Date of Report Jun 20, 2011
Quick Overview
Introduction
Mobile devices are too sophisticated and too widely held not to become the payment tools of the future. However developments have been slow and the
focus must move on from short-term ROI, as investing in mobile is really about shaping the payment device of the future. This report provides detailed
analysis of the key opportunities in mobile and the true threat from not taking advantage.
In a very real sense mobile payments are both a threat to and an opportunity for card issuers, acquirers and schemes. The opportunity is very clearly
defined. P2P, NFC, and m-commerce payments are all large addressable payment markets that mobile technology can play a role in. The threat comes
from inaction. If non-bank third parties move first, the role of banks in the future mobile payment value chain may be severely restricted. This report
outlines why the card industry should move forward with mobile now, and why it should focus on mobile commerce above all other areas.
Key findings and highlights
• Mobile penetration continues to increase, with 4.6 billion mobile subscriptions at the end of 2009. This suggests nearly two in three people globally
have a mobile handset. While the internet is often cited as the great telecommunication revolution of the last 25 years, the impact of mobile
technologies is undoubtedly much more widespread.
• The view of some within the industry is that NFC is the payment product that will ultimately drive the rollout of wider mobile payment services. NFC
will certainly develop strongly, but the need for hardware upgrades means that it cannot be the first part of the mobile payment landscape that the
industry fully brings to market.
• Mobile commerce must be the immediate priority. With global online sales of €1.09 trillion to target, no costly hardware upgrade to manage and
merchants who will embrace any opportunities to extend their sales channels to mobile this opportunity is huge. Most importantly if the cards
industry does not move on m-commerce, others will.
Table of Contents
EXECUTIVE SUMMARY
• Despite the hype, mobile payments have yet to take off
- Mobile payments are not the same thing as mobile banking
- Mobile devices should be the natural heir of plastic cards, but
significant challenges remain
• Mobile payments: threat or opportunity?
- Mobile holds huge opportunities across m-commerce, NFC and
P2P payments
- Mobiles also have unique properties that should be leveraged
to create entirely new payment services
- The real threat for the payment industry is not being able to
capitalize on this opportunity
- M-commerce must lead the way, as NFC will not drive mobile
payment rollout
DESPITE THE HYPE, MOBILE PAYMENTS HAVE YET TO
TAKE OFF
• Despite the attention paid to mobile, there has been little
progress to date
- Defining mobile payments: Any payment initiated with a mobile
handset
- The user interface for mobile payments and banking is
becoming more advanced
• Mobile devices are the natural heir of plastic cards, but
significant challenges remain
- Ubiquity in holding and greater functionality give mobile devices
clear advantages over cards
- However, the challenges of bringing together a range of
stakeholders continues to hold mobile back
- One of the most successful mobile payment platforms in the
world is proprietary
- The collapse of Simpay shows the difficulties in even bringing
together MNOs to work on mobile payments
MOBILE PAYMENTS: THREAT OR OPPORTUNITY?
• Mobile holds huge opportunities across m-commerce, NFC
and P2P payments
- M-commerce is a huge potential market and no longer
restricted to digital content
- Mobile P2P payments present a clear opportunity to replace
paper with card transactions
- NFC is the biggest opportunity in mobile but will be the last
area of mobile to develop
• Mobile also has unique properties that should be leveraged to
create entirely new payment services
- Combining m-commerce and NFC enables handsets to be the
tool for browsing, payment and fulfillment
- PayPal's move into mobile P2P points to direct opportunities
with m-commerce
- Combining NFC and P2P is a less developed opportunity, but
one that has potential nonetheless
• The real threat for the payment industry is not being able to
capitalize on this opportunity
- Despite the lack of progress to date, mobile will undoubtedly
dominate the future payments landscape
- The true threat is that inaction will see the cards industry
disintermediated from the future market
• M-commerce must lead the way, as NFC will not drive mobile
payment rollout
- M-commerce is the most attractive and immediately
addressable market, not NFC
- Creating the NFC business model is a challenge that must be
resolved
- Investing in mobile is not about short-term profit; it is about
staying involved in the future of consumer payments
APPENDIX
Supplementary data tables
Definitions
Credit card
Debit card
European Payments Council (EPC)
ePurse/eWallet
Interchange
Merchant service charge (MSC)
Mobile network operator (MNO)
Mobile payments
Point-of-sale (POS) terminal
Methodology
Primary research
Secondary research
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer
LIST OF TABLES
Table 1: Current standards bodies and their sector focus
Table 2: The four areas of P2P payments and their relative
attractiveness for mobile
Table 3: Total online commerce (goods and services) by country,
2009
Table 4: Total addressable market for contactless payments by value
band
Table 5: The total global addressable market for contactless
payments by merchant sector
Table 6: Total online payments (for goods and services) by country
made by PayPal, 2009
Table 7: Current relevant Datamonitor publications
Table 8: Future relevant publications
LIST OF FIGURES
Figure 1: The user experience in mobile payments is advancing
Figure 2: More advanced mobile platforms are only currently available
to a niche audience
Figure 3: On a purely functional level, mobile devices are the next
stage in the development of payment technologies for POS
payments, 2009
Figure 4: Mobile phone subscriptions far surpass any other
communications tool globally, 1998-2009
Figure 5: Mobile phone usage has become widespread across all
parts of the globe, 2009
Figure 6: The broad span of potential players in m-commerce is
slowing its wider roll-out
Figure 7: Docomo has successfully leveraged its market power to
develop a multi-functional mobile payment service
Figure 8: The global online commerce market will hit €1.09 trillion by
the end of 2009
Figure 9: The Ocado App provides a rich user interface for mcommerce
Figure 10: Square provides a way for merchants to accept card
payments using their iPhone and a plug-in magnetic stripe
reader
Figure 11: Mobile phone subscriptions globally are rising in line with the
value of remittances, suggesting an opportunity to bring
these two elements more closely together
Figure 12: The addressable market for contactless payments globally is
$963 billion
Figure 13: Petrol stations are the largest potential market for NFC
payments
Figure 14: In the Payez-Mobile trial, consumers making NFC payments
above €20 could pre-authorize their payments using the
keypad on their phones
Figure 15: Integrating discounts with NFC is a potential value-creator
for the merchant
Figure 16: There are opportunities for mobile payments to occupy new
areas of the payment landscape where there is overlap
between the major clusters of opportunity
Figure 17: Lufthansa is marketing its mobile boarding pass as a time
saving option
Figure 18: The US saw an estimated €16 billion in PayPal transactions
during 2009
Figure 19: PayPal's mobile presence covers SMS-, WAP- and
application-based services
Figure 20: TransferJet's service points to opportunities for P2P NFC
payment products
Figure 21: The Mint application enables consumers to gain a view of
their finances across multiple providers
Figure 22: MoBank customers can make m-commerce payments
through their handset
Figure 23: Mobile payments will reach maturity when services across
all three major payment areas are available
Figure 24: The trusted service manager sits between the MNO and
issuing/acquiring banks in the NFC ecosystem




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