Varying opinions exist on how quickly mobile payments will grow in the U.S., but payments executives generally believe the technology could become a mainstream option for purchasing goods and services within 36 months, new survey data suggest.
Consulting group Speer & Associates Inc. conducted the survey of 43 executives in June and found 90% of respondents believed mobile payments will become a mainstream choice for consumers by 2014. Only 5% of respondents believed mobile phones never will become a conventional method to conduct transactions.
“It was kind of shocking to learn that executives put a three-year timeframe on mobile payments becoming mainstream,” Neil St. Germain, Speer senior vice president, tells PaymentsSource.
Financial-services companies have dedicated divisions to mobile payments and are making investments, but many are taking a “wait-and-see” approach to the market despite the hype around the technology, Germain believes.
“I’m going to let someone else put their toe in the pool and see how cold it is before I jump in,” he says.
Predicting with any accuracy the impact of disruptive new technology on the mobile-payments industry may be impossible, but if past trends are an indication, mobile has the potential to alter the consumer-payment industry, Germain wrote in the report.
The most significant trend might be the proliferation of mobile phone in use worldwide. As of February, some 5.3 billion mobile subscribers existed worldwide, representing 77% of the planet’s population, the report says. Some 500 million of those subscribers can access the Internet using their mobile devices.
“Mobile technology will be increasingly used worldwide as the device of choice to achieve convergence, combining voice, text and Internet communications to consumers,” Germain writes.
Speer believes mobile payments have the right components to become a “viral” concept because financial-services providers and merchants see potential in the technology. The international card brands, however, likely will be most responsible for playing a key role in the mobile payments value chain.
Some 31% of survey respondents believe the card brands will spearhead mobile payments, followed by traditional banks and financial services providers at 28%. Some 23% of respondents believed telecommunication companies will be play the key role in the chain.
Financial-services companies appear to be focused on mobile payments, Speer’s survey found.
Asked how they would gauge their company’s participation in mobile payments, 51% of respondents said it was a high priority, while 33% said the priority was moderate and 13% said it was low (see chart). Only 3% indicated mobile payments was an “unclear priority” within their company.
The report also cites how retailers and the media-and-entertainment industry also will influence mobile payments.
Retailers view mobile payments as a way to increase overall sales and to develop payment opportunities that are efficient for smaller-ticket purchases, Germain writes. He cites Starbucks Corp. as a leader in the retail space. The coffee giant enables its customers to use a mobile application to pay at the point of sale (
Social-networking providers such as Facebook provide an opportunity to increase mobile payments through the online games consumers participate in through their platforms, the report says.
The varying mobile-payment methods available or that being developed could cause some confusion in the marketplace concerning what works best, Germain indicates in the report. The executives polled believe consumers will favor a mobile-payment method such as a mobile wallet that requires a funding source.
Some 49% of respondents believed consumers would favor using a credit card as a funding source for mobile payments, while 23% deemed a demand deposit account as a favorable funding source. Some 18% believed consumers would favor a prepaid account, while 8% thought consumers would favor direct-to-mobile billing and 3% cited a different funding source altogether.
What do you think about this? Send us your feedback.
