For the major card brands, emerging global markets that broadly lack access to financial services likely will represent the greatest earnings potential for mobile-payments initiatives, concludes a report from Macquarie Equities Research Group.
However, a separate study report suggests that half of the world’s phones enabled with Near Field Communication technology will be in the United States by 2014.
In its April 11 report, Macquarie contends mobile payments abroad have more potential to drive profitable growth for the major existing market players such as Visa Inc. and MasterCard Worldwide because they possess a broad international footprint.
“In the developed world, we view NFC and the ability to make mobile-proximity payments as promising, but [we] are less excited about their potential to drive profitable growth,” the report states.
Macquarie estimates in the next 10 years some 300 million consumers worldwide will enter an emerging middle class. Those consumers will require access to financial services, and mobile devices most likely will fill the need, the report states.
Indeed, Macquarie believes Visa and MasterCard will play integral roles in connecting the unbanked to financial services via mobile phones, which in turn should help raise the card brands’ projected share value by the end of the fiscal year. The firm’s revised price targets for Visa shares are $107, up from $90 set at the beginning of the fiscal year; and $333 for MasterCard, up from $288.
Macquarie suggests any of three intermediate to long-term catalysts could drive mobile payments.
Mobile should increase the speed in which electronic payments emerge in underdeveloped markets, the report says. And mobile devices should greatly benefit countries that lack the infrastructure to support a large volume of plastic payments.
Mobile payments also might help the card brands to gain favor with regulators, the report suggests. “Many regulators around the world believe that the payment networks are too profitable and need to be regulated,” the report says. Macquarie contends regulators view mobile-payment initiatives favorably because they connect underbanked consumers to financial services.
The report also notes that mobile payments represent an opportunity for the payment networks to address merchants’ needs in developed markets. Merchants over time have become frustrated with paying what they view is a high cost to accept electronic payments. The networks should present mobile technology to merchants as a way to drive greater sales volume through value-added services such as loyalty programs, according to the report.
In other mobile-payments related research, Juniper Research estimates 300 million NFC-enabled phones will be available by 2014, led by North America with half that total. France also is off to a strong start with some 1 million phones expected by the end of this year, according to Juniper.
The London-based research company predicts smartphone users in North America, Western Europe and other developed regions quickly will accept NFC mobile payments and marketing activity around coupons and smart posters.
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