A future in which we make every purchase via mobile device will have to wait just a bit longer. According to research firm Gartner, mobile payments aren’t taking hold as quickly as some expected.
More than 141 million people around the globe will make mobile payments in 2011, a 38 percent increase from 2010, according to the new report, “Market Trends: Mobile Payments Worldwide, 2011.” The total cost of those payments will be $86 billion, up from $49 billion in 2010, an increase of 76 percent.
Nonetheless, that growth – coming off a relatively small base to begin with – is less dramatic than many analysts had expected.
“In developing markets, despite favorable conditions for mobile payment, growth is not as strong as was anticipated,” Sandy Shen, research director at Gartner, said in a written statement. “Many service providers are yet to adapt their strategies to local requirements, and success models from Kenya and the Philippines are unlikely to be translated to other markets.”
Given the global ubiquity of cell phones – 5 billion of the world’s 7 billion people have at least one, according to a 2010 State Department study – it would stand to reason that the mobile payment market would be exploding. And in some developing countries, where mobile device users are less likely to have traditional bank accounts, they are.
But in developed countries, the primary technology that makes payments via mobile devices possible – primarily near-field communication (NFC) – is proving more complex than many had anticipated. Less surprisingly, consumers are simply proving resistant to parting with money over a mobile connection.
“We believe mass market adoption of NFC payments is at least four years away,” said Shen. “The biggest hurdle is the need to change user behavior by convincing consumers to pay with mobile phones instead of cash and cards.”
In developing markets where the mobile payment market is thriving, it is being fueled by money transfers and prepaid top-ups. In Eastern Europe, the Middle East and Africa, “where people value the convenience of sending money to relatives and topping up mobile accounts,” these two services will account for 54 percent and 32 percent of all transactions in 2011, according to Gartner.
In more developed markets, app stores like Apple’s and mobile initiatives from blue chip retailers like Best Buy and Amazon have made merchandise purchases the most common type of mobile transaction. “We predict that in 2011, merchandise purchases will account for 90 percent and 77 percent of all transactions in North America and Western Europe, respectively,” said Shen.
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