The New Hotness ~ Mobile Payments

A few weeks ago, Juniper estimated that the transaction value of mobile payments for digital and physical goods, money transfers and NFC transactions will reach a whopping $670 billion by 2015, up from $240 billion this year. Today, Gartner is releasing its data report, taking a look at actual users of mobile payments services. Gartner’s research shows that mobile payment users worldwide will surpass 141.1 million in 2011, a 38.2 percent increase from 2010, in which mobile payment users reached 102.1 million. Worldwide mobile payment volume is projected to total $86.1 billion, up 75.9 percent from 2010 volume of $48.9 billion.

Gartner says that particularly in developing markets, growth in mobile payments is not as strong as expected. Sandy Shen, research director at Gartner, writes, While developing markets have favorable conditions for mobile payments, such as high penetration of mobile devices and low banking penetration, this is no guarantee of success, unless service providers adapt their strategies to local market requirements.

Shen adds that she believes the mass market adoption of NFC payments is at least four years away, with the biggest “hurdle” as changing users behavior from using cash and credit cards to using their mobile phone. And she predicts that in 2011, merchandise purchases from mobile apps like eBay and Amazon will account for 90 percent and 77 percent of all mobile payments transactions in North America and Western Europe, respectively.

In developing markets, Gartner says money transfers and prepaid incentives will drive transaction volumes. In Eastern Europe, the Middle East and Africa, these two services will account for 54 percent and 32 percent of all transactions in 2011, respectively. It’s interesting that Gartner doesn’t seem to be too bullish on NFC in the near future. Clearly Google is making a big bet on NFC with the launch of its mobile payments product Google Wallet. And PayPal just announced its integration with NFC for Android phones. Perhaps that leaves more breathing room for innovative companies like Square to continue to disrupt the mobile payments space without adopting NFC technology.

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